Question

A home mortgage loan closed on July 1 for $765,000 at 5.5% interest amortized over 25 years at $4,697.77 per month. Using a 360-day year, what would the principal amount be after the monthly payment was made August 1?

Answer 1

$763,808.48

Step-by-step explanation:

The computation of the principal amount after considering the monthly payment is shown below:

But before that first we have to determine the annual interest i.e

= $765,000 × 5.5%

= $42075

Now the one month interest rate which is

= $42,075 ÷ 12 months

= $3506.25

And, the given interest rate per month is $4,697.77

So, now the principal amount is

= $765,000 - ($4,697.77 - $3506.25)

= $765,000 - $1,191.52

= $763,808.48