If you have a $150,000 30-year 5% mortgage, how much of your first monthly payment of $805.50 would go toward interest?

Question

Quizplus · Accepted Answer

To calculate the amount of your first monthly payment that goes toward interest, we need to start with the total mortgage amount, the interest rate, and the length of the loan. Since the mortgage is for $150,000 with a 5% interest rate over 30 years, we can use a mortgage calculator or formula to determine that the monthly payment is $805.50.

For the first payment, the interest is calculated based on the remaining principal balance of the loan. Since this is just the first payment, the entire loan balance is still outstanding, so the interest portion of the payment will be the highest it will ever be in the life of the loan.

The interest portion of the first monthly payment can be calculated by multiplying the outstanding loan balance by the monthly interest rate. The monthly interest rate is the annual interest rate divided by 12 months. In this case, the monthly interest rate is 0.05 / 12 = 0.0041667 (rounded).

So, the interest portion of the first monthly payment is:

$150,000 x 0.0041667 = $625

Therefore, the answer is B, $625.00.

If You Have a $150,000 30-Year 5% Mortgage, How Much