Imagine you have $50,000 for a house down payment for a $250,000 home. Now, go through the process of estimating the monthly payments on a 30-year, fixed-rate mortgage of $200,000 assuming your mortgage carries a 5% interest rate. (Since we emphasized annual rather than monthly payments in this class, imagine you were paying your mortgage once a year and then divide by 12 months.) If you pay off the mortgage after thirty years, how much will you have paid in interest beyond the price of the house itself?

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Heres how to estimate the monthly payments and total interest paid for the mortgage 1 Calculate the ... View the full answer