### 6.3 Home Mortgages

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• Math Help

To find the interest in Example 2, note that the home mortgage is for \$250,000.

• Consumer Suggestion

Are you considering buying a home? Check out these top things to know to help you get started.

• Checkpoint Solution
1. The monthly payment is

So, the total interest paid is

2. The monthly payment is

So, the total interest paid is

3. The monthly payment is

So, the total interest paid is

4. No. It can be concluded that as the annual percentage rate increases, total interest paid over the term of the loan does not increase at the same rate. In all examples so far, the total interest paid has increased by a greater factor than the APR did.

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Sometimes I think I will never buy a house because I don't want to pay hundreds of thousands of dollars more than the actual value of my house. One option that I am considering is to save money while I rent for a few years, and then buy a house in cash.
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Ron Larson (author)1 decade ago |
When you are obtaining a home mortgage, the idea of having a longer term can be attractive because it produces lower monthly payments. Remember however, that the cost of a longer term is significant. As Example 2 points out, it can add hundreds of thousands of dollars to your total payment.
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