Jan bought a house on December 31st and took a $420,000 mortgage

Finance Oct 20, 2020

Jan bought a house on December 31st and took a $420,000 mortgage. The mortgage is 30 years with an APR of 3.0%. How much of the total amount spent on the house is from interest? Answer with 2 decimals (ex. $1,000.00).

Expert Solution

First we calculate Annual Payment using PMT Function in Excel:

=pmt(rate,nper,-pv,fv)

Here,

PMT = Annual Payment = ?

Rate = 3%

Nper = 30 years

PV = $420,000

FV = 0

Substituting the values in formula:

=pmt(3%,30,-420000,0)

PMT or Annual Payment = $21,428.09

Total Payment = $21,428.09*30 = $642,842.67

Total Interest Payment = $642,842.67 - $420,000 = $222,842.67

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