Question

A individual decides to refinance her home with a new mortgage loan worth $238,000 at a fixed annual interest rate of 5.925% for 30 years. The first monthly payment is $1,415.47. How much of this first payment is principal, and how much interest?

(Annual Interest Rate / 12 = Monthly Interest Rate)
(Principal x Monthly Interest Rate = Payment to Interest)
(Monthly Payment - Payment to Interest = Payment to Principal)

Answer 1

Of the first monthly payment of $1,415.47, $1,175.425 goes towards interest and $240.045 goes towards the principal for the mortgage loan of $238,000 at an annual interest rate of 5.925% over 30 years.

Step-by-step explanation:

To calculate how much of the first payment of $1,415.47 is principal and how much is interest for a new mortgage loan worth $238,000 at a fixed annual interest rate of 5.925% for 30 years, we can follow the steps provided:

• First, convert the annual interest rate to the monthly interest rate by dividing by 12: 0.05925 / 12 = 0.0049375 (monthly interest rate).
• Next, calculate the payment that goes towards interest: $238,000 x 0.0049375 = $1,175.425.
• Then, subtract the interest from the monthly payment to find the principal portion: $1,415.47 - $1,175.425 = $240.045.

Therefore, the first payment of $1,415.47 consists of $1,175.425 of interest and $240.045 of principal.