To determine how much money will be spent in interest alone over the course of a 4% 30-year mortgage, let's go through the following steps:
1. Identify the Principal Amount:
The principal amount of the mortgage is \[tex]$200,000.
2. Identify the Monthly Payment:
For a 4% interest rate, the monthly payment is \$[/tex]955.
3. Determine the Loan Period:
The loan period is 30 years.
4. Calculate the Total Number of Payments:
Since payments are made monthly over 30 years, the total number of payments can be calculated as:
[tex]\[
\text{Total Payments} = 30 \text{ years} \times 12 \text{ months/year} = 360 \text{ payments}
\][/tex]
5. Calculate the Total Amount Paid Over the Loan Period:
The total amount paid is the monthly payment multiplied by the total number of payments:
[tex]\[
\text{Total Amount Paid} = 955 \text{ dollars/month} \times 360 \text{ months} = \$ 343,800
\][/tex]
6. Calculate the Total Interest Paid:
The total interest paid is the difference between the total amount paid and the principal amount:
[tex]\[
\text{Total Interest Paid} = \text{Total Amount Paid} - \text{Principal} = 343,800 - 200,000 = \$ 143,800
\][/tex]
So, the total amount spent in interest alone over the course of the 4% 30-year mortgage is \$143,800.
