Question

a borrower takes out a 30 year mortgage loan for $361,923 with an interest rate of 6% and monthly payments. What portion (dollar amount) of the first months payment would be applied to interest

Answer 1

Let us first take out what is given on the question :

Loan Term 30 years, converting years to months it will be 30 * 12 = 360 Installment.

Montly interest = 6% /12 = 0.50% Per month

Principal Amount = $ 361,923

We need to identify EMI to get first month interest.

EMI = Principal Amount * Rate of interest * (1 + Rate of interest)^Number of Installment) /

((1+Rate of interest )^ Number of installment) -1

Emi = $ 361,923 * .50% * (6.022575) / (5.022575)

= $ 2,169.91

Interest payment will be $ 361,923 * .50% = $ 1809.62

Portion of interest payment = ($1809.62 / $ 2,169.91 ) * 100%

= 83.63% of the portion moved to interest payment.

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