1. SECTION
10-2
Monthly Payment and
Total Interest pp

2. Key Words to Know interest (p. 346)
The amount of money paid for the use of a lender’s money.

3. Formula 1 Monthly = Amount of Mortgage × Monthly Payment
Payment $1, for a $1,000 Loan

4. Formula 2
Amount Paid = Monthly Payment × Number of Payments

5. Formula 3
Total Interest = Amount Paid – Amount of Mortgage
Charged

6. Example 1
Carol and Carl Brookemister 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?

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

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

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

10. 347:1-13