Question

The cost of a home is financed with a $160,000, 30-year fixed-rate mortgage at 4.2%. The monthly payment for the loan is $782. For the first payment, what are the interest payment, principal payment, and balance of the loan?

Answer 1

The interest payment for the first month is $560. The principal payment for the first month is $222. The balance of the loan after the first payment is $159,778.

Step-by-step explanation:

The monthly payment for the loan is $782. Let's break down the first payment into the interest payment, principal payment, and balance of the loan. To find the interest payment, we multiply the loan balance ($160,000) by the monthly interest rate. The interest rate is 4.2% per year, so the monthly interest rate is 4.2% / 12 = 0.35%. The interest payment for the first month is $160,000 * 0.35% = $560. To find the principal payment, we subtract the interest payment from the monthly payment: $782 - $560 = $222. To find the balance of the loan after the first payment, we subtract the principal payment from the loan balance: $160,000 - $222 = $159,778.