Gabe and Eugenia bought a house! Their loan is for $117,000, for 15 years at an annual interest rate of 4%. This results in a monthly payment of $865.43. If only the minimum payment is made in month one, how much of the first payment goes toward reducing her balance? First, let's find the amount of interest she paid in month 1

Question

Mathematics

Irvin Kidd

14 April, 02:07

Gabe and Eugenia bought a house! Their loan is for $117,000, for 15 years at an annual interest rate of 4%. This results in a monthly payment of $865.43. If only the minimum payment is made in month one, how much of the first payment goes toward reducing her balance? First, let's find the amount of interest she paid in month 1

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Answers (1)

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Noelle Fitzgerald · Answer 1

Principal element is $475.43

Interest payment is $390

Step-by-step explanation:

The amount of interest paid in month one is 4%*$117,000*1/12=$390

The interest is calculated based on the annual interest rate of 4% apportioned to reflect one month interest by multiplying by 1/12

The principal element of monthly payment is the monthly payment minus interest.

principal paid in month one=$865.43-$390=$475.43

Ultimately,$475.43 goes toward reducing her loan balance while the $390 is interest on loan