What is the term for the total amount a borrower pays over the life of a loan, including interest and fees?

The term for the total amount a borrower pays over the life of a loan, including interest and fees, is referred to as the total cost of the loan. This figure encompasses not only the original amount borrowed, known as the loan principal, but also all the interest accrued throughout the loan term and any fees that are associated with obtaining and maintaining the loan. Understanding this term is crucial for borrowers as it provides a comprehensive view of their financial commitment when taking on a mortgage.

The total cost of the loan allows borrowers to make informed comparisons between different loans since varying loans can have different structures in terms of interest rates and associated fees. This understanding can aid in determining the most financially advantageous loan option available.

Other terms listed, such as loan principal and monthly payment, describe specific components of the borrowing process but do not capture the entirety of the financial obligation like the total cost of the loan does. Amortized cost relates more to the method of paying off the loan in scheduled installments, rather than the full expenditure over the entire loan term. Consequently, the total cost of the loan encompasses all aspects of the borrower's financial obligation.