Question

There is a principal balance of $84,902.13 on a mortgage. The interest rate is 7.75% per annum. The taxes and insurance total $1,915.70 per year. The monthly payment is $835.58, including interest, taxes and insurance, with the remainder applied to reduce the principal. What is the principal balance after the next payment?

Answer 1

Principal after next payment: 84,774.52‬

Step-by-step explanation:

the principal after the payment will be the current principal less the payment amortization.

TO know the amortization we must know the interest, taxes and insurance contained within the next payment:

Insurance and taxes: 1,915.7 per year

we divide by 12 to know the monthly fees = 159.64

then, for the interest we do:

principal x rate x time

being time 1 month over 12 of the year:

84,902.13 x 0.0775 x 1/12 = 548.3262 = 548.33

The quota is for 835.58 we subtract interest, insurance and taxes:

835.58 - 159.64 - 548.33 = 127.61

Then, we subtract from the principal this amortization:

84,902.13 - 127.61 = 84,774.52‬