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David and Debi Davidson have just signed a 15-year, 3% fixed rate mortgage for $380,000 to...

David and Debi Davidson have just signed a 15-year, 3% fixed rate mortgage for $380,000 to buy their house. Find out this couple's monthly mortgage payment by preparing a loan amortization schedule for the Davidson’s for the first 2 months; find out how much of their payments applied to interest; and after 2 payments, how much of their principal will be reduced. (construct a loan amortization schedule and show your calculations).

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Answer #1

Loan amount=PV=$380,000

Interest rate per month=3%/12=0.25%

Number of periods=n=15*12=180

Monthly payment=380000*(A/P,0.0025,180)

Let us calculate the interest factor

So,

Monthly payment=380000*0.00690582=$2624.21

# Month   Monthly Payment Payment towards Interest, I=PB*0.25% Payment towards Principal Pricipal balance, PB
0 380000.00
1 2624.21 950.00 1674.21 378325.79
2 2624.21 945.81 1678.40 376647.39

Total Reduction in principal=1674.21+1678.40=$3352.61

Loan amount left after 2nd payment=$376647.39

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