In order to finance the purchase of their new home, Dr. Gary Adams and his wife, Becky, will secure a loan...

Question

4. In order to finance the purchase of their new home, Dr. Gary Adams and his wife, Becky, will secure a loan at 6.75% for 15 years. If their home costs $348,500, calculate the total interest that they will have paid at the end of the 15-year loan term.
$555,161.40
$206,518.52
$3,084.23
$206,661.40

SnapAndSolve AI · Accepted Answer

To calculate the total interest paid, we first need to determine the monthly payment using the loan amount, interest rate, and loan term. The table provides the monthly payment per $1,000 of loan for a 15-year term at 6.75%, which is 8.84.

Calculate the monthly payment:
Monthly payment = (Loan amount / 1000) * Monthly payment per $1,000
= (348,500 / 1000) * 8.84
= 348.5 * 8.84
= $3,080.54
Calculate the total payment over the loan term:
Total payment = Monthly payment * Number of months
= $3,080.54 * 15 * 12
= $554,497.20
Calculate the total interest paid:
Total interest = Total payment - Loan amount
= $554,497.20 - $348,500
= $205,997.20

The closest option to the calculated total interest is $206,518.52.

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In order to finance the purchase of their new home, Dr. Gary Adams and his wife, Becky, will secure a loan...

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