Question

Assume you are looking to buy a house $200,000 with a 20 year mortgage at 12%, estimate the monthly mortgage payment, first months interest, total amount to be repaid and the total interest.

Answer 1

	Monthly rate(M)=	yearly rate/12=	1.00%	Monthly payment=	2202.17
Month	Beginning balance (A)	Monthly payment	Interest = M*A	Principal paid	Ending balance
1	200000.00	2202.17	2000.00	202.17	199797.83
2	199797.83	2202.17	1997.98	204.19	199593.63
3	199593.63	2202.17	1995.94	206.24	199387.40
4	199387.40	2202.17	1993.87	208.30	199179.10
5	199179.10	2202.17	1991.79	210.38	198968.72
6	198968.72	2202.17	1989.69	212.49	198756.23
7	198756.23	2202.17	1987.56	214.61	198541.62
8	198541.62	2202.17	1985.42	216.76	198324.87
9	198324.87	2202.17	1983.25	218.92	198105.94
10	198105.94	2202.17	1981.06	221.11	197884.83
11	197884.83	2202.17	1978.85	223.32	197661.51
12	197661.51	2202.17	1976.62	225.56	197435.95
13	197435.95	2202.17	1974.36	227.81	197208.14
14	197208.14	2202.17	1972.08	230.09	196978.05
15	196978.05	2202.17	1969.78	232.39	196745.65
16	196745.65	2202.17	1967.46	234.72	196510.94
17	196510.94	2202.17	1965.11	237.06	196273.88

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225	32411.29	2202.17	324.11	1878.06	30533.23
226	30533.23	2202.17	305.33	1896.84	28636.39
227	28636.39	2202.17	286.36	1915.81	26720.59
228	26720.59	2202.17	267.21	1934.97	24785.62
229	24785.62	2202.17	247.86	1954.32	22831.30
230	22831.30	2202.17	228.31	1973.86	20857.44
231	20857.44	2202.17	208.57	1993.60	18863.85
232	18863.85	2202.17	188.64	2013.53	16850.31
233	16850.31	2202.17	168.50	2033.67	14816.64
234	14816.64	2202.17	148.17	2054.01	12762.64
235	12762.64	2202.17	127.63	2074.55	10688.09
236	10688.09	2202.17	106.88	2095.29	8592.80
237	8592.80	2202.17	85.93	2116.24	6476.56
238	6476.56	2202.17	64.77	2137.41	4339.15
239	4339.15	2202.17	43.39	2158.78	2180.37
240	2180.37	2202.17	21.80	2180.37	0.00
	Interest paid=	sum=	328521.34

Monthly mortgage payment = 2202.17

first month interest = 2000

total amount paid = Monthly mortgage payment*number of months = 2202.17*12*20 = 528520.8

total interest paid = 328521.34

Where

Interest paid = Beginning balance * Annual interest rate

Principal = Annual payment – interest paid

Ending balance = beginning balance – principal paid

Beginning balance = previous Year ending balance