Answer:
For a $200,000 mortgage, with an interest rate of 4% paid over 20 years, the monthly payment is $1,211.96. After one month, what is the balance of the loan?
Round your answer to the nearest dollar.
Do NOT round until you calculate the final answer.
To calculate the balance of the $200,000 mortgage after one month, we can use the following formula:
Balance = Loan Amount - (Monthly Payment - (Loan Amount * Interest Rate / 12))
Given information:
- Loan Amount: $200,000
- Interest Rate: 4% per year
- Loan Term: 20 years
- Monthly Payment: $1,211.96
Step 1: Calculate the interest for the first month.
Interest for the first month = Loan Amount * Interest Rate / 12
Interest for the first month = $200,000 * 0.04 / 12 = $666.67
Step 2: Calculate the balance after the first month.
Balance = Loan Amount - (Monthly Payment - Interest for the first month)
Balance = $200,000 - ($1,211.96 - $666.67)
Balance = $200,000 - $545.29
Balance = $199,454.71
Rounding the answer to the nearest dollar, the balance of the loan after one month is $199,455.
