Question

A borrower has a 30 - year mortgage of $75,500 at 7 percent interest with a monthly principal and interest payment of $502.83. What was the loan balance after the first payment?

Answer 1

To calculate the loan balance after the first payment, subtract the interest portion from the monthly payment.

Step-by-step explanation:

To find the loan balance after the first payment, we need to consider the amount of principal and interest paid in the first payment. The monthly payment of $502.83 includes both principal and interest. We can calculate the interest portion of the payment using the formula:

Interest = Loan Balance * Monthly Interest Rate

We can rearrange this formula to find the Loan Balance:

Loan Balance = Monthly Payment - Interest Portion

Substituting the given values, we have:

Interest Portion = Loan Balance * Monthly Interest Rate

Loan Balance = Monthly Payment - Interest Portion

Once we have calculated the interest portion, we can subtract it from the monthly payment to find the principal portion. Finally, subtracting the principal portion from the loan balance gives us the loan balance after the first payment.