To determine how much money will be spent in interest alone over the course of the 4% 30-year mortgage, we follow a series of steps:
1. Principal Amount: The initial loan amount is \[tex]$200,000.
2. Monthly Payment: The monthly payment for a 4% interest rate mortgage is \$[/tex]955.
3. Number of Payments: Since it is a 30-year mortgage, and there are 12 months in a year, the total number of monthly payments is:
[tex]\[
30 \text{ years} \times 12 \text{ months/year} = 360 \text{ months}
\][/tex]
4. Total Payment Over 30 Years: To find out the total amount paid over the term of the mortgage, we multiply the monthly payment by the number of months:
[tex]\[
955 \text{ dollars/month} \times 360 \text{ months} = 343,800 \text{ dollars}
\][/tex]
5. Interest Paid: The total interest paid is the total amount paid over the mortgage term minus the principal. We then subtract the principal amount from the total payment:
[tex]\[
343,800 \text{ dollars (total payment)} - 200,000 \text{ dollars (principal)} = 143,800 \text{ dollars}
\][/tex]
Hence, the amount spent in interest alone over the course of the 4% 30-year mortgage is \$143,800.
