Question

mae took out a 30-year loan for $235,000 at 4.6% interest, compounded monthly. if her monthly payment on the loan will remain $1204.71 for the life of the loan, how much will mae have paid in interest once the loan is paid off?

$433,695.60
$198,695.60
$235,000.00
$324,300.00

Answer 1

To calculate how much Mae will have paid in interest when the loan is fully paid off, you can follow these steps:

1. **Calculate the total amount paid over the life of the loan.**
2. **Subtract the principal from the total amount paid to find the interest paid.**

1. **Total Amount Paid:**
Mae's monthly payment is $1,204.71, and the loan is for 30 years (or 360 months).

\[
\text{Total Amount Paid} = \text{Monthly Payment} \times \text{Number of Payments}
\]

\[
\text{Total Amount Paid} = 1,204.71 \times 360 = 433,695.60
\]

2. **Calculate the Interest Paid:**
The principal amount of the loan is $235,000.

\[
\text{Interest Paid} = \text{Total Amount Paid} - \text{Principal}
\]

\[
\text{Interest Paid} = 433,695.60 - 235,000 = 198,695.60
\]

Thus, the total amount Mae will have paid in interest once the loan is paid off is **$198,695.60**.