Question

Jane borrows a loan of $200,000 with minimum payment of 3% in the first 3 years. The loan is 30 years term and annual interest rate is 6.5%. Payment is made monthly. What is the ending balance at the end of the first month?

Answer 1

In the given case,

Loan amount = $200000

Minimum payment is 3% in first 3 years it means 3% in first 60 months (3 years × 12 months). It means $200000 × 3% = $6000 in first 60 months that means $100 per month ($6000 ÷ 60months)

Hence, principal payment per month for first 60 months is $100 per month.

The ending balance at the end of first month :-

= Loan amount - payment of principal amount in first month

= $200000 - $100

= $199900

The ending balance at the end of first month is $199900

We assumed here that the payment in first month is already done.

These are all the information and calculations required to solve the above given question.

If there is any clarifications required regarding the above provided answer, please mention them in comment box.

I hope, all the above mentioned information and calculations are useful and helpful to you.

Thank you.