In order to purchase a home, a family borrows $86,000 to be paid back over a 25-year period in equal monthly payments. What percentage of the first monthly payment goes toward the principal
If the annual interest rate is 8%? If the annual interest rate is 12%?

Question

Quizplus · Accepted Answer

The percentage of the first monthly payment that goes toward the principal is calculated using the formula for the monthly payment and the interest portion. For an 8% annual interest rate, approximately 13.6% of the first payment goes toward the principal, and for a 12% annual interest rate, approximately 5.1% goes toward the principal.

In Order to Purchase a Home, a Family Borrows $86,000