If you put 20% down, you must borrow the remaining 80%:
- ($140,000)*(0.80) = $112,000
The total amount you will pay is, assuming annually compounded interest is:
- A = P(1 + r)t
Where:
- A = the total amount to be repayed
- P = the principle or initial amount borrowed = $112,000
- r = annual interest rate as a decimal value = 6% = 0.06
- t = years = 25
A = ($112,000)(1.06)25 = $480,689.52
In 25 years, you will make 25*12 = monthly 300 payments, so the monthly payment will be:
- Monthly Payment = $480,689.52/300 = $1602.30
The total interest you pay is:
- $480,689.52 - $112,000 = $368,689.52
If you spread the interest payments evenly over each of the 300 monthly payments, the monthly interest payment is:
- $368,689.52/300 = $1228.97
The rest of the monthly payment ($1602.30-$1228,97=$373.33) pays off the principle ($112,000).
