Question

Jerry has just purchased his first home for $190,000. He put down a 20 percent down payment of $38,000 and took out a 5 percent mortgage for the rest. His mortgage payment is $700 per month. How much of his first monthly mortgage payment is amortization?

Answer 1

$66.67

Explanation:

The calculation of first monthly mortgage payment is amortization is given below:-

Amount borrowed = Purchase first home cost - Down payment

= $190,000 - $38,000

= $152,000

Annual interest = ($152,000 × 5%) ÷ 12

= $7,600 ÷ 12

= $633.33 per month

Now,

First monthly payment = Mortgage payment - Annual interest

= $700 - $633.33

= $66.67

Hence, we simply applied the above formula.