Question

House sells for $523,500 and a 8% down payment is made. A mortgage is secured at 7% for 30 years. Compute an amortization schedule for the first 3 months. Round your answers to two decimal places, if necessary.

The value of the mortgage is $481.620 and the monthly payment is $3202.77

Answer 1

The amortization schedule for the first 3 months of a mortgage with a loan of $481,620, a monthly payment of $3202.77 at a 7% interest rate, is calculated by finding the interest for each month, subtracting it from the monthly payment to find the principal paid, and adjusting the mortgage balance accordingly.

Step-by-step explanation:

To compute an amortization schedule for the first 3 months of a mortgage, we will use the provided loan details. The house sold for $523,500 with an 8% down payment, leaving a mortgage of $481,620. The monthly payment is $3202.77 at an interest rate of 7% for 30 years.

1. Calculate the monthly interest: interest for the first month is 0.07 / 12 * $481,620 = $2,807.57.
2. Calculate the principal paid: principal for the first month is $3202.77 - $2,807.57 = $395.20.
3. Update the remaining mortgage balance: $481,620 - $395.20 = $481,224.80 for the second month.
4. Repeat steps 1 to 3 for subsequent months. This results in a small increase in the principal paid and a decrease in the interest as the balance decreases.

The amortization schedule for the first three months will show interest and principal components of each payment decreasing and increasing respectively, and the remaining balance decreasing each month.