A borrower obtains a 30-year fixed mortgage for $250,000 at 6% annual interest. Approximately how much total interest will be paid over the life of the loan?

Explanation

On a $250,000 loan at 6% for 30 years, the monthly payment is approximately $1,499. Total payments = $1,499 × 360 = $539,640. Total interest = $539,640 − $250,000 = $289,640 (approximately $289,595). This illustrates the significant interest cost of long-term financing.