To determine the amount of money spent in interest alone over the course of a 30-year mortgage with a 5% interest rate and a principal amount of \[tex]$150,000, let's follow these steps:
1. Identify the given data:
- Principal amount (loan amount): \$[/tex]150,000
- Annual interest rate: 5%
- Monthly payment: \[tex]$805
- Mortgage duration: 30 years
2. Convert the mortgage duration from years to months:
Since mortgage payments are made monthly, we need to determine the total number of monthly payments over 30 years:
\[
\text{Total number of payments} = 30 \, \text{years} \times 12 \, \text{months/year} = 360 \, \text{months}
\]
3. Calculate the total amount paid over the entire mortgage period:
This amount is found by multiplying the monthly payment by the total number of payments:
\[
\text{Total amount paid} = 805 \, \text{dollars/month} \times 360 \, \text{months} = 289,800 \, \text{dollars}
\]
4. Calculate the total interest paid:
The total interest paid is the difference between the total amount paid and the principal amount:
\[
\text{Total interest paid} = \text{Total amount paid} - \text{Principal amount}
\]
\[
\text{Total interest paid} = 289,800 \, \text{dollars} - 150,000 \, \text{dollars} = 139,800 \, \text{dollars}
\]
Thus, the amount of money that will be spent in interest alone over the course of the 30-year mortgage at a 5% interest rate is \(\$[/tex]139,800\).
