Question

You can afford a $1250 per month mortgage payment. You have found a 30 year loan at 7% interest.
How big of a loan can you afford?
How much total money will you pay the loan company?
How much of that money is interest?

Answer 1

1)
Loan Value	$ 187,884.46
Loan Value is the present value of monthly payment.
Loan value	=	Monthly Payment	*	Present Value of annuity of 1
	=	$       1,250.00	*	150.3075679
	=	$ 187,884.46
Working:
Present Value of annuity of 1	=	(1-(1+i)^-n)/i		Where,
	=	150.3075679		i	0.005833
				n	360
2)
Total money paid for loan	=	Monthly Payment	*	Number of months
	=	$       1,250.00	*	360
	=	$ 450,000.00
3)
Interest	=	Total repaid	-	Loan amount
	=	$ 450,000.00	-	$ 187,884.46
	=	$ 262,115.54