Question

lars has been approved for$420,000, 20-year mortgage with an APR of 5.125%.What is his monthly payment ? How much interest would he expect to pay on the loan in one month?How much of the monthly payment will go towards the principal?

Answer 1

Answer:

Monthly Payment = $2,286.85

Interest on first month payment = $1,793.75

Principal value on first month payment =  $493.10

Step-by-step explanation:

lars has been approved for $420,000 for loan.

Time for loan = 20-years

APR (Annual Rate of interest ) = 5.125%

We need to find monthly payment. First month interest and First month principle.

Formula for loan:

$p=\dfrac{PV\cdot \frac{r}{n}}{1-(1+\frac{r}{n})^{-nt}}$

Where,

p is monthly payment.

PV = Loan Amount (PV=$420,000)

R = Rate of interest (R=0.05125)

t = Loan period ( t=30)

n = Mode of payment (n=12)

Substitute the value into formula and solve for p

$p=\dfrac{420000\cdot \frac{0.05125}{12}}{1-(1+\frac{0.05125}{12})^{-12\cdot 30}}$

p=$2,286.85

Thus, Monthly Payment =$2,286.85

Interest for first month $=420000\times \dfrac{0.05125}{12}=1793.75$

Interest pay on the loan in on month = $1,793.75

Principle value on first month payment = 2286.85 - 1793.75 = $493.10

The monthly payment will go towards the principal is $493.10

Answer 2

The answer is in the question