To determine the amount of money spent on interest alone for the 4% 30-year mortgage, we need to follow these steps:
1. Identify the given information:
- Principal (initial amount of the mortgage): \[tex]$200,000
- Monthly payment: \$[/tex]955
- Interest rate: 4%
- Term of the mortgage: 30 years
2. Calculate the total amount paid over the term of the mortgage:
- A 30-year term has [tex]\(30 \times 12 = 360\)[/tex] months.
- Therefore, the total payment over the entire period is:
[tex]\[
\text{Total Payment} = \text{Monthly Payment} \times \text{Number of Months} = 955 \times 360
\][/tex]
Plugging in the numbers, we get:
[tex]\[
\text{Total Payment} = 955 \times 360 = 343800
\][/tex]
So, the total amount paid over the 30 years is \[tex]$343,800.
3. Calculate the total amount spent on interest:
- The total amount spent on interest is the difference between the total amount paid over the term of the mortgage and the principal.
\[
\text{Interest Paid} = \text{Total Payment} - \text{Principal} = 343800 - 200000
\]
Solving this, we have:
\[
\text{Interest Paid} = 343800 - 200000 = 143800
\]
Thus, the total amount spent on interest alone is \$[/tex]143,800.
So, the amount of money that will be spent on interest alone over the course of the 4% 30-year mortgage is \$143,800.
