What is the total interest paid within the term of a mortgage with a principal balance of $420,500 at 3.85% over 25 years?

To determine the total interest paid on a mortgage with a principal balance of $420,500 at an interest rate of 3.85% over a term of 25 years, it is important to understand how mortgage calculations work, particularly in terms of the total amortized cost.

First, the monthly payment can be calculated using the formula for a fixed-rate mortgage:

[

M = P \frac{r(1 + r)^n}{(1 + r)^n - 1}

]

Where:

• (M) is the total monthly payment.

• (P) is the principal loan amount ($420,500).

• (r) is the monthly interest rate (annual rate divided by 12 months).

• (n) is the number of payments (25 years times 12 months per year).

Given an annual interest rate of 3.85%, the monthly interest rate will be:

[

r = \frac{3.85}{100} \div 12 = 0.00320833

]

The total number of payments over 25 years will be:

[

n = 25 \times 12 = 300

]

Substituting these values into the mortgage