Question

You are considering to buy a house. The current value of the house is $550,000 and the 30-year mortgage rate based on your FICO score is 4.15%. You also decided to buy the house with a $50,000 down payment, What are the repayment of principal and remaining balance in a month 3 respectively?

Please show your work.

a. $701 and $499,299

b. $704 and $498,595

c. $706 and $497,889

d. $704 and $499,299

Answer 1

Loan Amount = PV = $550,000 - $50,000 = $500,000

n = 30*12 = 360 months

r = monthly interest rate = 4.15%/12 = 0.345833333%

Monthly loan payment = [r*PV] /[1 - (1+r)^-n]

= [0.345833333%*$500,000] / [1 - (1+0.345833333%)^-360]

= $1,729.16667 / 0.711439625

= $2,430.5178

Monthly loan payment is $2,430.52

Loan Repayment Schedule
Month	Opening Balance	Payment	Interest portion	Principal Portion	Closing Balance
A	B	C	D = B*4.5%/12	E = C-D	F = B-E
1	500000	2430.52	1729.166667	701.3533	499298.6
2	499298.6	2430.52	1726.741153	703.7788	498594.9
3	498594.9	2430.52	1724.307251	706.2127	497888.7

Therefore, repayment of principal and remaining balancee in momth 3 is respectively is $706 and $497,889

Option c is correct