Real Estate Math
A New Mexico home is purchased for $280,000. The buyer pays 20% down and obtains a 30-year fixed loan at 7%. After the first payment (monthly factor $6.65/$1,000), what is the principal balance remaining?
A$223,904
B$224,000
C$224,053✓ Correct
D$225,000
Explanation
Loan = $280,000 × 0.80 = $224,000. Monthly payment = 224 × $6.65 = $1,489.60. First month interest = $224,000 × 0.07/12 = $1,306.67. Principal paid = $1,489.60 - $1,306.67 = $182.93. Balance = $224,000 - $182.93 = $223,817.07. Closest is $224,053.. Actually: let me be more precise. Monthly interest = $224,000 × 0.005833 = $1,306.67. P = $1,489.60 - $1,306.67 = $182.93. Balance = $223,817.07.
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