Question

Tony addison obtained a 20-year, $45,000 mortgage loan from united savings with an interest rate of 8.5%. his monthly payment is $390.60. after the first payment, what is the new principal? $41,675.34 $42,395.68 $45,578.87 $44,928.15

Answer 1

As given,  

Loan amount is = $45000

Rate of interest = 8.5%

So, Tony's mortgage will attract an interest of:

$45000\times\frac{8.5}{100}$ = $3825  (this is yearly)

And for 1st month it will be = $\frac{3825}{12}$=  $318.75  

As given, the first month's payment is $390.60 and this covers the interest Additional amount ($390.60 - $318.75 = $71.85) is a payment against the principle.

Hence, the new principle after the 1st month is $71.85 less than $45000

= 45000-71.85 = $44928.15

Hence, the last option $44928.15 is the correct answer.