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Understanding mortgage loansUnderstanding mortgage loans while you sharpen your basic mathematics skills is what I will show in this lesson When buying a house most people take mortgage loans from a bank for the amount they finance, or still unpaid. When a loan is given, it is repaid with interest in equal monthly installments over a period of time, usually from 15 to 30 years. Ever wondered about some simple basic math involved in that type of loan? Say for instance you buy a house for 250,000. Then, you make a down payment of 15% of the purchase price and take a 30-year mortgage for the balance. What is your down payment? What is your mortgage? Down payment = Purchase Price × Percent Down Down payment = 25,000 × 0.15 = 37500 Amount of Mortgage = Purchase Price − Down Payment Amount of Mortgage = 250,000 − 37500 = 212500 If your monthly payment is 1200 dollars, what is the total interest charged over the life of the loan? Total Monthly Payment = Monthly payment × 12 Months per year × Number of years Total Monthly Payment = 1200 × 12 × 30 = 432000 Total Interest Paid = Total Monthly Payment − Amount of Mortgage Total Interest Paid = 432000 − 212500 = 219500 
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