Posted by **anthony** on Wednesday, December 2, 2009 at 1:31am.

The price of a home is $120,000. The bank requires a 10%

down payment and two points of closing. The cost of the home

is financed with 30-year fixed-rate mortgage at 8.5%.

Find the total cost of interest over 30 years.

- math -
**drwls**, Wednesday, December 2, 2009 at 2:45am
The amount of the loan is $120,000 -10% + 2% = $110,400, assuming the "points" are added to the financed amount.

Using the amortization table at

http://www.fenclwebdesign.com/amortization-calculator.htm

I find that the monthly payment will be

$848.89. There will be 360 such payments over 30 years, for a total payment amount of $305,600. Subract the original principle (110,400) from that to get the interest paid.

- math -
**tchrwill**, Wednesday, December 2, 2009 at 10:04am
The amount of the loan is $120,000 -10% + 2% = $110,400, assuming the "points" are added to the financed amount.

R = Pi/[1 - (1+i)^(-n)] where

P = 110,400

R = the monthly payment

i = 8.5/[100(12)] = .007083...

n = 30(12) = 360 yielding

R = $848.88 per month.

Therefore, the total interest paid is 360(848.88) - 100,400.

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