Monthly Payment and Total Interest pp SECTION

Click to edit Master text styles Second level Third level Fourth level Fifth level 2 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 2 of Section Objective Determine: monthly payment total amount paid total interest charged

Click to edit Master text styles Second level Third level Fourth level Fifth level 3 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 3 of interest (p. 346) The amount of money paid for the use of a lender’s money. Key Words to Know

Click to edit Master text styles Second level Third level Fourth level Fifth level 4 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 4 of Monthly = Amount of Mortgage × Monthly Payment Payment $1,000 for a $1,000 Loan Formula 1

Click to edit Master text styles Second level Third level Fourth level Fifth level 5 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 5 of Amount Paid = Monthly Payment × Number of Payments Formula 2

Click to edit Master text styles Second level Third level Fourth level Fifth level 6 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 6 of Total Interest = Amount Paid – Amount of Mortgage Charged Formula 3

Click to edit Master text styles Second level Third level Fourth level Fifth level 7 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 7 of The Hunt to Find a Home p. 346 Can you shop around for mortgage rates or are they all the same no matter where you go?

Click to edit Master text styles Second level Third level Fourth level Fifth level 8 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 8 of Carol and Adam Burke have applied for an $80, 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 799 of your textbook.) What is the total amount of interest charged? Example 1

Click to edit Master text styles Second level Third level Fourth level Fifth level 9 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 9 of Find the monthly payment. Amount of Mortgage × Monthly Payment $1,000 for a $1,000 Loan $80, × $7.34 = $ $1, Example 1 Answer: Step 1

Click to edit Master text styles Second level Third level Fourth level Fifth level 10 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 10 of Find the amount paid. Monthly Payment × Number of Payments $ × (12 months × 30 years) $ × 360 = $211, Example 1 Answer: Step 2

Click to edit Master text styles Second level Third level Fourth level Fifth level 11 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 11 of Find the total interest charged. Amount Paid – Amount of Mortgage $211, – $80, = $131, Example 1 Answer: Step 3

Click to edit Master text styles Second level Third level Fourth level Fifth level 12 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 12 of (Use the Monthly Payment for a $1,000 Loan table on page 799 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

Click to edit Master text styles Second level Third level Fourth level Fifth level 13 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 13 of $149, Practice 1 Answer

Click to edit Master text styles Second level Third level Fourth level Fifth level 14 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 14 of 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

Click to edit Master text styles Second level Third level Fourth level Fifth level 15 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 10-2, Slide 15 of Monthly payment: $1, 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, Practice 2 Answer

Monthly Payment and Total Interest 10-2 END OF SECTION