Question

You took out a fully amortizing 30 year mortgage with the initial balance of $681,016. This mortgage has a fixed interest rate at 3%. After you completed two full years of monthly payments, how much have you paid toward principal? Round your answer to the nearest cent (e.g. if your answer is $7000.9873, enter 7000.99).

Answer 1

Loan maount = $681,016

First we will calculate the outstanding loan balanace after 2 years:-

Where, P = Loan amoount = $681,016

r = Periodic Interest rate = 3%/12 = 0.25%

n= no of periods of loan = 30 year*12 = 360

m = no of periods of payment already made = 2 years*12 = 24

Oustanding balance = $652,147.05

Loan Balance after 2 years is $652,147.05

Principal amount paid towards loan in 2 years = Loan amount - Loan Balance after 2 years

= $681,016 - $652,147.05

Principal amount paid towards loan in 2 years = $28,868.95

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