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CNBC.com reported mortgage applications increased 9.9% due to a decrease in the rate on 30-year fixed rate mortgages to 4.03%. Dennis Natali wants to purchase a vacation home for $250,000 with 20% down. Calculate his monthly payment for a 22-year mortgage at 7.0%. Calculate total interest. (Use Table 15.1.) (Do not round intermediate calculations. Round your final answers to the nearest cent.)

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From the information given, the total interest payable on the mortgage is 290, 659.84 See the calculation and analysis below.

What is the calculation on the above mortgage scenario?

We are given

Vacation Home purchase amount = $250,000

Down payment = 20% i.e. $235,000 X 20% = $50,000

Loan Amount = $250,000 - $50,000

Rate = 7%

Period = 22 years = 22 x 12 = 264 monthly installment

Monthly installment = $1,858.56 (See attached spread sheet).

Recall that Total interest paid

= Monthly Installment X N - Principle loan amount

Hence,

1,858.56 x 264 - 200,000

= 490,659.84 - 200,000

Total interest paid = 290, 659.84

Learn more about interest on mortgage at;
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