Question

A family is purchasing a house and needs to finance a 195,000 mortgage from the bank with an annual percentage rate (APR) of 5.3%. The family is financing it over 30 years and making monthly payments. What is the total amount the family will pay back to the bank (to the nearest dollar)?
$195,000
$328,322
$389,822
$447,210

Answer 1

Calculate the monthly payment:

195,000 x ( (0.05/12)x1+0.053)^12)/(1+0.053)^12-1)

Monthly payment = 1,082.84

Multiply monthly payment by 12 to get one year: 1082.84x 12 = 12994.08

Now multiply by 30 years:

12994.08 x 30 = 389822.40

The answer is $389,822