Question

A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month's mortgage payment is interest

Answer 1

The interest in the first month's mortgage payment is $2,333.33.

How is monthly mortgage interest determined?

The monthly mortgage interest can be determined using an online finance calculator that computes the monthly payment.

The payment schedule produced from the calculation shows the monthly payments classified according to interest and principal.

Data and Calculations:

N (# of periods) = 360 (30 x 12)

I/Y (Interest per year) = 7%

PV (Present Value) = $400,000

FV (Future Value) = $0

Results:

PMT = $2,661.21

Sum of all periodic payments $958,035.59

Total Interest $558,035.59

Schedule

Period PV               PMT Interest FV

1 $400,000.00 $-2,661.21 $2,333.33 $-399,672.12

2 $399,672.12 $-2,661.21 $2,331.42 $-399,342.33

3 $399,342.33 $-2,661.21 $2,329.50 $-399,010.62

Thus, the interest in the first month's mortgage payment is $2,333.33.

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Answer 2

The portion of the first month's mortgage payment meant for interest is $2,333.33

What is a mortgage?

Mortgage is a loan taken to acquire property which requires periodic interest payment such as monthly , semiannually or even annually.

First month interest=loan amount*annual interest rate/12

First month interest=$400,000*7%/12

First month interest=$2,333.33

Find further explanation on mortgage interest below:

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