## Real Estate Math – Calculating Interest

Calculating interest is an essential real estate math question that you may encounter on your real estate licensing exam. Forbes magazine recently indicated that the interest rate is around 3.87 percent. As a real estate agent, it is important to know general trends of the rates (are they rising, falling, or staying the same?). It just takes a quick phone call to your local lender to give you the latest information. Let’s look at an example of how much interest a buyer will pay through the life of their loan.

You’ll need to know a few things in order to solve this real estate math problem:

1. The loan amount
2. The number of years of the loan
3. The interest rate

### Let’s take an example of the real estate math problem:

If John gets a 30-year fixed \$200,000 loan from ABC Mortgage for 3.87% interest, calculate the total amount of interest John will pay over the entire life of the loan.

### Solution:

The solution to this real estate math problem is:

Interest = Loan Amount x Number of Years x Interest Rate

\$200,000 x 30 years x 0.0387 = \$232,200