Question

HOW MUCH OF HIS FIRST PAYMENT WENT TO NOTE REDUCTION?

Answer 1

We need to determine the amount of interest owed for the first month of the 30-year monthly loan.  To do that we take the principal and multiply it by the interest rate divided by 12.

So:  105000 × 0.71 ÷ 12 = $621.25

Since our monthly payment is given as $705.63, the leftover amount after paying off the monthly interest will go to note reduction.  In other words,

$705.63 - $621.25 = $84.38

Therefore, $84.38 of his $705.63 went to note reduction, or we can say about 11.9% of his first monthly payment went to note reduction.  Yikes, that is sad to think about.