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House Hunting Finding your own place is exciting, but it is also a big responsibility. What are some costs associated with renting or buying a home?

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Lesson Objective Use a table or formula to determine the monthly payment, the total amount paid, and the total interest charged.

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Carol and Adam Burke have applied for an $80,000.00 mortgage loan at an annual interest rate of 8.00 percent. The loan is for a period of 30 years and will be paid in equal monthly payments that include interest. (Use the Monthly Payment for a $1,000 Loan table on page A13 of your textbook.) What is the total amount of interest charged? Example 1

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Find the monthly payment. Amount of Mortgage × Monthly Payment $1,000 for a $1,000 Loan $80,000.00 × $7.34 = $587.20 $1,000.00 Example 1 Answer: Step 1

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Find the amount paid. Monthly Payment × Number of Payments $587.20 × (12 months × 30 years) $587.20 × 360 = $211,392.00 Example 1 Answer: Step 2

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Find the total interest charged. Amount Paid – Amount of Mortgage $211,392.00 – $80,000.00 = $131,392.00 Example 1 Answer: Step 3

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(Use the Monthly Payment for a $1,000 Loan table on page A13 of your textbook.) Selling price: $276,000. Down payment: 25 percent. Terms: 8 percent for 15 years. What is the total interest charged? Practice 1

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$149,205.60 Practice 1 Answer

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The Ekharts bought a home for $235,000. They made a down payment of 20 percent and financed the rest at 7 percent for 30 years. What is the monthly payment? What is the total amount to be paid? What is the interest charged? How much interest would they save if they financed the same amount at 7 percent for 15 years? Practice 2

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Monthly payment: $1,250.20 Total amount to be paid: $450,072 Interest charged: $262,072 Interest they would save if they financed the same amount at 7 percent for 15 years: $145,850.40 Practice 2 Answer

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