Step-by-step explanation:
Here's a breakdown of the total paid and total paid to the principal for a $300,000, 15-year mortgage with a 4.35% APR after 10 years using a spreadsheet:
Monthly Payment(1) Total Interest Paid(2) Total Paid to Principal(3) Total Loan Balance(4)
(1) (2) (3) (4)
$2,150.07 $15,792.51 $5,707.49 $294,292.51
$2,150.07 $14,831.22 $6,719.85 $287,572.66
$2,150.07 $13,832.33 $7,738.74 $280,833.92
$2,150.07 $12,795.85 $8,764.22 $274,069.70
$2,150.07 $11,721.78 $9,828.29 $267,241.41
$2,150.07 $10,609.12 $10,941.95 $260,300.46
$2,150.07 $9,457.87 $12,092.20 $253,208.26
$2,150.07 $8,267.99 $13,282.08 $246,026.18
$2,150.07 $7,039.48 $14,510.59 $238,715.59
$2,150.07 $5,772.34 $15,778.73 $231,336.86
Total Paid = Total Monthly Payment x Number of Years Paid = $2150.07/month * 10 years = $21,500.68
Total Paid to Principal = Sum of Total Paid to Principal for each year = $157,787.34
Notes:
You can enter the loan amount, interest rate, and loan term into the spreadsheet's loan payment calculator function to get the monthly payment.
The spreadsheet calculates the monthly interest and principal paid based on the loan balance at the beginning of each month.
The total loan balance is constantly decreasing as the principal amount is paid down.
After 10 years:
The total amount paid will be $21,500.68.
The total amount paid to the principal will be $157,787.34.
It's important to remember that this is after 10 years of payments on a 15-year mortgage. The borrower would still owe a significant amount on the loan ($231,336.86).