Question

Suppose Kevin borrows $100,000.00 on a mortgage loan, and the loan is to be repaid in 7 equal payments at the end of each of the next 7 years. If the lender charges 3% on the balance at the beginning of each year, and the homeowner makes an annual payment of $16,050.64, the homeowner in interest in the first year will pay

Answer 1

Kevin will pay $3,000 in interest during the first year of his mortgage loan, which is calculated by applying a 3% interest rate to the initial loan amount of $100,000.00.

Step-by-step explanation:

Calculating Interest Payment for the First Year

The student is asking about the interest payment Kevin must make in the first year of his mortgage loan. To calculate the interest for the first year, we apply the interest rate to the initial loan balance. In Kevin's case, he borrows $100,000.00, and the lender charges him a 3% interest rate annually. The interest payment for the first year would be 3% of $100,000, which is $3,000.

Therefore, Kevin will pay $3,000 in interest during the first year of his mortgage loan. This is part of the total annual payment of $16,050.64, the rest of which goes towards reducing the principal balance of the mortgage.