You borrow $149,000 to buy a house. The mortgage rate is 7.5% and the loan period is 30 years. Payments are made monthly. If you pay for the house according to the loan agreement,how much total interest will you pay?

Question

Quizplus · Accepted Answer

Using a mortgage calculator or formula, we can calculate the total amount of interest paid over the life of the loan:

Total Interest = (Monthly Payment x Total Number of Payments) - Loan Amount

Monthly Payment = (Loan Amount x [Interest Rate/12]) / [1 - (1+Interest Rate/12)^(-Total Number of Payments)]

Plugging in the given values, we get:

Monthly Payment = ($1,042.76)

Total Interest = ($1,042.76 x 360) - $149,000 = $226,059.60

Therefore, the best choice is C.

You Borrow $149,000 to Buy a House