SECTION 10-2 Monthly Payment and Total Interest pp. 346-348.

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Presentation transcript:

SECTION 10-2 Monthly Payment and Total Interest pp. 346-348

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

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

Formula 2 Amount Paid = Monthly Payment × Number of Payments

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

Example 1 Carol and Carl Brookemister have applied for an $80,000.00 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 Answer: Step 1 Find the monthly payment. Amount of Mortgage × Monthly Payment $1,000 for a $1,000 Loan $80,000.00 × $7.34 = $587.20 $1,000.00

Example 1 Answer: Step 2 Find the amount paid. Monthly Payment × Number of Payments $587.20 × (12 months × 30 years) $587.20 × 360 = $211,392.00

Example 1 Answer: Step 3 Find the total interest charged. Amount Paid – Amount of Mortgage $211,392.00 – $80,000.00 = $131,392.00

347:1-13