.Q. You purchase a home for $275,000 with a 10% down payment. You take out a...

.Q. You purchase a home for $275,000 with a 10% down payment. You take out a 30-year mortgage loan at 4.35% interest. What is the total amount of interest paid in the first 4 years? Round to the nearest 0.01.

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Expert Solution

Loan amount = Price of Home*(1- % of downpayment) = $275,000*(1-0.10)

Loan amount = $247,500

No of Loan payments = 30 years*12 months = 360

Monthly Interest rate = APR/12 = 4.35%/12 = 0.3625%

No of payments made in 4 years = 4 years*12 = 48

Calculating the Total Interest amount paid in the first 4 years using excel "CUMIPMT" function:-

So, the total amount of interest paid in the first 4 years is $41,616.29

If you need any clarification, you can ask in comments.

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jeff jeffy answered 1 year ago

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