Rosario was able to get a great interest rate on her house. She financed $150,000 for 15 years with an interest rate of 2.75%.
Part A) How much will she pay in interest over 15 years?
Part B) When she pays of her mortgage, how much will she have spent in all?
Part A) To calculate the interest paid over 15 years, we first need to calculate the annual interest payment. We can use the formula:
Annual interest payment = Loan amount x Interest rate
Annual interest payment = $150,000 x 0.0275
Annual interest payment = $4,125
So, over 15 years, the total interest paid will be:
Total interest paid = Annual interest payment x Number of years
Total interest paid = $4,125 x 15
Total interest paid = $61,875
Part B) To calculate the total amount paid when she pays off her mortgage, we need to add the total interest paid to the loan amount:
Total amount paid = Loan amount + Total interest paid
Total amount paid = $150,000 + $61,875
Total amount paid = $211,875
Therefore, when Rosario pays off her mortgage in 15 years, she will have spent a total of $211,875.