A house is purchased for $200,000 with a 10% down payment thereby financing $180,000 with a home...

Question:

A house is purchased for $200,000 with a 10% down payment thereby financing $180,000 with a home loan. There are no points or closing charges.

A conventional 30 year loan is used with 6% per year compounded monthly with monthly payments.

What portion of the first monthly payments goes toward interest?

Loan Amortization:

Loans are often structured in a way that calls for monthly payments of the same amount over the life of the loan, e.g., mortgages and car loans. The amortization of the loan refers to the distribution of the monthly payment between interest payment and principal repayment.

Answer and Explanation:

The portion of first monthly payment that goes toward interest = 900 / 1079.19 = 83.40%.

To find the portion of interest that goes towards interest...

See full answer below.

Become a Study.com member to unlock this answer! Create your account

View this answer

Learn more about this topic:

Loading...
Calculating Monthly Loan Payments

from Remedial Algebra I

Chapter 25 / Lesson 8
11K

Related to this Question

Explore our homework questions and answers library