Question

You obtain a 20 year mortgage for $150,000 with a 6% interest rate. Your yearly mortgage payment is $13,078. When the first loan payment is made what is the amount applied to the Principal, and what is the new loan balance? g

Answer 1

Answer:

The amount that is applied to the Principal is $4,078, while the new loan balance is 145,922.

Explanation:

First loan payment = $13,078

First interest payment =  $150,000 × 6% = $9,000

First principal payment = First loan payment - First interest payment =  $13,078 - $9,000 = $4,078

New loan balance = Total loan amount - First principal payment = $150,000 - $4,078 = 145,922

Therefore, the amount that is applied to the Principal is $4,078, while the new loan balance is 145,922.