You are looking at buying a home with an asking price of $300,000. Since the market is hot, you plan to put in an offer for full asking price. You also plan to put a $70,000 down payment and finance the remainder. Your bank is offering you a 30-year loan at 3.5% APR (compounded monthly). Assume your first payment is made one month from today and all payments are made on time, calculate the total amount paid to the bank over the course of 30 years.

(1)Monthly equal total payments:

Total payment is $371,089

(2)Monthly equal principal installment:

Total payment is $351,085

Explanation:

You also plan to put a $70,000 down payment and finance the remainder -> loan amount = $300,000 - $70,000 = $230,000  

Number of payment in 30 years = 30 * 12 = 360  

There’re 2 ways for loan payments in commercial bank now:

(3)Monthly equal total payments:

We use formula PMT to find monthly payment = PMT(rate, number of payment, loan amount) =  PMT(3.5%/12,360,230000) = $1,032.82  

Total payment = 360 * $1,032.82  = $371,089

(4)Monthly equal principal installment

The principal paid is loan amount $230,000; and the interest paid is $121,085. Total paid is $351,085