Question 1180046: You can afford a $1300 per month mortgage payment. You've found a 30 year loan at 7% interest.
How big of a loan can you afford? Round your answer to the nearest dollar.
$
b) How much total money will you pay the loan company? Round your answer to the nearest dollar.
$
c) How much of that money is interest? Round your answer to the nearest dollar.
$
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Answer by math_tutor2020(3816)   (Show Source):
You can put this solution on YOUR website!
Part (a)
Refer to this link here
https://www.mtgprofessor.com/formulas.htm
for the formula to calculate the monthly payment
The idea is to use algebra to solve for the amount loaned (L).
In this case,
P = 1300
c = r/12 = 0.07/12 = 0.00583333333333 approximately
n = 12*30 = 360 months
So,
The largest loan you can afford is $195,399.84 when the highest monthly mortgage payment possible is $1,300.
When rounding to the nearest dollar, we must round down because rounding up will mean the monthly payment will exceed $1300.
So we'll round $195,399.84 to $195,399
Answer: $195,399
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Part (b)
Simply multiply the monthly payment (1300) with the number of months (30*12 = 360) to get the total amount paid back to the loan company
So we get: 1300*360 = 468,000
This is both principal and interest
Answer: $468,000
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Part (c)
In the previous part, we calculated that you'll pay back a total of $468,000
Subtract off the loan amount to find the amount of interest paid back.
total interest = (total amount paid back) - (amount loaned)
total interest = ($468,000) - ($195,399)
total interest = $272,601
Answer: $272,601
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