Question

You can afford a $1250 per month mortgage payment. You've found a 30 year loan at 6% interest.

a) How big of a loan can you afford?

$

b) How much total money will you pay the loan company?

$

c) How much of that money is interest?

Answer 1

	Monthly rate(M)=	yearly rate/12=	0.50%	Monthly payment=	1250.00
Month	Beginning balance (A)	Monthly payment	Interest = M*A	Principal paid	Ending balance
1	208969.01	1250.00	1044.85	205.15	208763.85
2	208763.85	1250.00	1043.82	206.18	208557.67
3	208557.67	1250.00	1042.79	207.21	208350.46
4	208350.46	1250.00	1041.75	208.25	208142.21
5	208142.21	1250.00	1040.71	209.29	207932.92
6	207932.92	1250.00	1039.66	210.34	207722.59
7	207722.59	1250.00	1038.61	211.39	207511.20
8	207511.20	1250.00	1037.56	212.44	207298.76
9	207298.76	1250.00	1036.49	213.51	207085.25
10	207085.25	1250.00	1035.43	214.57	206870.68
11	206870.68	1250.00	1034.35	215.65	206655.03
12	206655.03	1250.00	1033.28	216.72	206438.30
13	206438.30	1250.00	1032.19	217.81	206220.50
14	206220.50	1250.00	1031.10	218.90	206001.60
15	206001.60	1250.00	1030.01	219.99	205781.61
16	205781.61	1250.00	1028.91	221.09	205560.51
17	205560.51	1250.00	1027.80	222.20	205338.32
18	205338.32	1250.00	1026.69	223.31	205115.01
19	205115.01	1250.00	1025.58	224.42	204890.58

.

.

.

351	12163.01	1250.00	60.82	1189.18	10973.83
352	10973.83	1250.00	54.87	1195.13	9778.70
353	9778.70	1250.00	48.89	1201.11	8577.59
354	8577.59	1250.00	42.89	1207.11	7370.48
355	7370.48	1250.00	36.85	1213.15	6157.33
356	6157.33	1250.00	30.79	1219.21	4938.12
357	4938.12	1250.00	24.69	1225.31	3712.81
358	3712.81	1250.00	18.56	1231.44	2481.37
359	2481.37	1250.00	12.41	1237.59	1243.78
360	1243.78	1250.00	6.22	1243.78	0.00

Where

Interest paid = Beginning balance * Monthly interest rate

Principal = Monthly payment – interest paid

Ending balance = beginning balance – principal paid

Beginning balance = previous Month ending balance

a)Principal = 208969.01

b) total money paid = monthly payment*number of months = 300*1250=375000

c) interest = total money paid-principal = 375000-208969.01=166030.99