Question

ginnie has an interest-only home equity loan at an annual interest rate of 7%. if her monthly payment is $1,458, how much is the loan’s principal balance (rounded to the nearest dollar)?

Answer 1

What is Loan Principal Balance
Principal is the initial sum of a loan in the context of borrowing; it can also refer to the balance still owed on a loan. The principal of a $50,000 mortgage, for instance, is $50,000. If you pay down $30,000, the remaining $20,000 is the primary balance. The principal of a loan determines how much interest you pay. The amount of your monthly loan installments is applied to the accrued interest first and only then to the principle when you make a payment. The only method to lower the amount of interest that accrues each month is to reduce the loan's principal.

Main content
$250,000
$1,458 x 12 months = 17,496
17,496 / 0.07 =$249,942

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