A borrower taking out a $250,000 mortgage with an annual interest rate of 4% for 30 years will pay how much in interest over the life of the loan?

To determine the total interest paid over the life of a loan, you need to understand how mortgage calculations work over time. When a borrower takes out a mortgage, they agree to pay back both the principal (the amount borrowed) and the interest calculated on that principal.

In this scenario, a borrower is taking out a $250,000 mortgage at an annual interest rate of 4% for a term of 30 years. The total amount repaid at the end of the loan term can be calculated using the monthly payment formula for amortizing loans, which accounts for the principal and interest.

The formula generally results in a total payment over 30 years that exceeds the original principal significantly due to interest. In this case, the monthly payments will amount to approximately $1,193.54. Over 30 years (360 months), the total amount paid would be roughly $429,000.

To find the total interest paid, you simply subtract the original loan principal from the total paid over the life of the loan. This calculation shows that:

Total Payments: $429,000 Principal: $250,000 Total Interest Paid: $429,000 - $250,000 = $179,000 (which might vary slightly based on