Answer:
Sure. Here are the steps on how to calculate the interest and balance reduction for Poppy's first mortgage payment:
Calculate the monthly interest rate.
The monthly interest rate is calculated by dividing the annual interest rate by 12. In this case, the annual interest rate is 4.9%, so the monthly interest rate is:
monthly interest rate = 4.9% / 12 = 0.41%
Calculate the interest paid for the first month.
The interest paid for the first month is calculated by multiplying the monthly interest rate by the outstanding loan balance. In this case, the outstanding loan balance is $180,000, so the interest paid for the first month is:
interest paid = 0.41% * $180,000 = $738
Calculate the principal amount of the first payment.
The principal amount of the first payment is calculated by subtracting the interest paid from the monthly payment. In this case, the monthly payment is $955.31 and the interest paid is $738, so the principal amount of the first payment is:
principal amount = $955.31 - $738 = $217.31
Calculate the balance after the first payment.
The balance after the first payment is calculated by subtracting the principal amount from the outstanding loan balance. In this case, the outstanding loan balance is $180,000 and the principal amount of the first payment is $217.31, so the balance after the first payment is:
balance after first payment = $180,000 - $217.31 = $177,782.69
Therefore, the interest paid in month one is $738 and the balance reduced after the first payment is $217.31.
Explanation: