The Smiths bought a
$397,000
house. They made a down payment of $41,000 and took out a mortgage for the rest. Over the course of 15 years they made monthly payments of
$3004.14 on their mortgage until it was paid off.
(a) What was the total amount they ended up paying for the house (including the down payment and monthly payments)?
(b) How much interest did they pay on the mortgage?
(a) The total amount they ended up paying for the house includes the down payment and the monthly payments. The down payment was $41,000. The monthly payments were $3004.14 for 15 years, which is a total of 12 x 15 = 180 payments. So, the total amount paid in monthly payments is 180 x $3004.14 = $540,145.20. Therefore, the total amount they ended up paying for the house is $41,000 + $540,145.20 = $581,145.20.
(b) The amount of interest they paid on the mortgage can be calculated by subtracting the amount of the mortgage from the total amount they paid for the house. The amount of the mortgage is the total cost of the house minus the down payment, or $397,000 - $41,000 = $356,000. So, the amount of interest they paid is $581,145.20 - $356,000 = $225,145.20.
To calculate the total amount they ended up paying for the house (including the down payment and monthly payments), follow these steps:
Step 1: Calculate the mortgage amount
Mortgage amount = Total house price - Down payment
Mortgage amount = $397,000 - $41,000
Mortgage amount = $356,000
Step 2: Calculate the total monthly payment amount over 15 years
Number of months = 15 years * 12 months
Number of months = 180 months
Total monthly payment amount = Monthly payment * Number of months
Total monthly payment amount = $3,004.14 * 180
Total monthly payment amount = $540,745.20
Step 3: Calculate the total amount paid for the house
Total amount paid = Down payment + Total monthly payment amount
Total amount paid = $41,000 + $540,745.20
Total amount paid = $581,745.20
Therefore, the total amount they ended up paying for the house (including the down payment and monthly payments) is $581,745.20.
To calculate the interest paid on the mortgage, follow these steps:
Step 1: Calculate the total principal paid
Total principal paid = Mortgage amount - Down payment
Total principal paid = $356,000 - $41,000
Total principal paid = $315,000
Step 2: Calculate the total interest paid
Total interest paid = Total amount paid - Total principal paid
Total interest paid = $581,745.20 - $315,000
Total interest paid = $266,745.20
Therefore, the Smiths paid a total of $266,745.20 in interest on their mortgage.