Question

Hailie is buying a house and has asked the bank for a $145,000 mortgage. The bank offers her 4.5% interest for 30 years, resulting in a monthly payment of $734.69. If Hailie only makes the minimum payment each month, how much will she pay back over the life of the loan? How much of that is interest?

Answer 1

To calculate the total amount Hailie will pay back over the life of the loan, we need to multiply the monthly payment by the total number of payments:

Total payments = Monthly payment x Total number of payments

The total number of payments is the number of years times the number of payments per year:

Total number of payments = 30 years x 12 months/year = 360 payments

So, the total payments Hailie will make is:

Total payments = $734.69/month x 360 payments = $264,088.40

To calculate the total interest paid over the life of the loan, we need to subtract the original loan amount from the total payments:

Total interest = Total payments - Loan amount

Total interest = $264,088.40 - $145,000 = $119,088.40

So, Hailie will pay back a total of $264,088.40 over the life of the loan, and $119,088.40 of that will be interest.

Answer 2

With a 30-year mortgage at 4.5%, Hailie will pay a total of $1,629,106.40 over the life of the loan. Of that, $846,716.40 will be interest.

To calculate the total amount paid back, we can use the following formula:

Total amount paid = Monthly payment * Number of payments

In this case, the monthly payment is $734.69 and the number of payments is 360 (12 months per year x 30 years). Plugging these values into the formula, we get:

Total amount paid = $734.69 * 360 = $1,629,106.40

To calculate the total amount of interest paid, we can use the following formula:

Total interest paid = (Total amount paid) - (Principal amount borrowed)

In this case, the total amount paid is $1,629,106.40 and the principal amount borrowed is $145,000. Plugging these values into the formula, we get:

Total interest paid = $1,629,106.40 - $145,000 = $846,716.40

Therefore, Hailie will pay a total of $1,629,106.40 over the life of the loan, of which $846,716.40 will be interest.

Explanation: