Question

If you have a $150,000 30-year 5% mortgage, how much of your first monthly payment of $805.50 would go toward principal?

Answer 1

Answer:

$180.5

Explanation:

First, we would determine the amount that goes toward the interest by dividing the interest rate by 12 months to have the monthly interest rate and then, multiply that for the total amount of the loan:

$150,000 × (0,05/12) = $625

Now, that we have the amount that goes toward the interest, we subtract this from the first monthly payment to find the amount that goes toward the principal that is the quantity you borrowed:

$805.50-$625= $180.5

The amount of the first monthly payment of $805.50 that would go toward the principal is $180.5.

Answer 2

The answer is $625.000