Calculate the total amount paid over the term of a five-year fixed rate mortgage of $260 000 amortized over 25 years at an annual interest rate of 6.49%.

To calculate the total amount paid over the term of a five-year fixed-rate mortgage, we need to determine the monthly mortgage payment and then find the total paid over the five-year period.

### Calculation Steps:

1. **Loan Amount:**

   The loan amount is $260,000.

2. **Calculate the Monthly Interest Rate:**

   The annual interest rate is 6.49%. Therefore, the monthly interest rate is:

   \[
   \text{Monthly Interest Rate} = \frac{6.49\%}{12} = \frac{0.0649}{12} \approx 0.00540833
   \]

3. **Calculate the Total Number of Payments for Amortization:**

   The mortgage is amortized over 25 years, so the total number of payments is:

   \[
   \text{Total Payments} = 25 \times 12 = 300
   \]

4. **Calculate the Monthly Payment:**

   The formula for the monthly mortgage payment $ M $ is:

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

   Where:
   - $ P $ is the loan amount ($260,000),
   - $ r $ is the monthly interest rate (0.00540833),
   - $ n $ is the total number of payments (300).

   Substituting these values into the formula gives:

   \[
   M = 260,000 \times \frac{0.00540833(1 + 0.00540833)^{300}}{(1 + 0.00540833)^{300} - 1}
   \]

5. **Calculate the Total Payment Over Five Years:**

   Since the term is five years, the total number of payments in five years is:

   \[
   \text{Payments in 5 Years} = 5 \times 12 = 60
   \]

   \[
   \text{Total Payment in 5 Years} = M \times 60
   \]

Let's compute these values to find the total amount paid over the five-year term.Sara's monthly payment for the five-year fixed-rate mortgage is approximately $1,753.91. Over the five-year term, she will pay a total of approximately $105,234.86.

### Summary:
- **Loan Amount:** $260,000
- **Monthly Payment:** $1,753.91
- **Total Payment Over 5 Years:** $105,234.86

This total includes the principal and interest paid during the five-year fixed term, and it does not cover the entire 25-year amortization period.

If you have any further questions or need additional calculations, feel free to ask!

### Follow-up Questions
1. How much of the total payment goes towards interest in the first five years?
2. What will be the remaining balance on the mortgage after five years?
3. How does a change in interest rate affect the monthly payment?
4. What happens if Sara makes additional payments toward the principal during the five years?
5. How would refinancing at a lower rate after five years impact future payments?
6. What is the impact of shortening the amortization period on the monthly payment?
7. Can Sara lock in a new rate after the five-year term, and how does it work?
8. How would a longer or shorter fixed term affect the total payment over that period?

### Tip
Understanding the difference between the mortgage term and the amortization period is crucial. The term is the length of time you are committed to your lender under the current interest rate and conditions, while the amortization period is the time it will take to pay off the mortgage in full.

Learn how to calculate the total amount paid over a five-year term on a $260,000 mortgage amortized over 25 years at 6.49% interest. Includes step-by-step calculation of monthly payments and total payments. Ideal for understanding mortgage amortization and interest calculations.

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