Real Estate Math
A 30-year mortgage of $200,000 at 5% interest has a monthly payment of $1,073.64. How much of the FIRST payment goes to interest?
A$1,073.64
B$833.33
C$240.31✓ Correct
D$200.00
Explanation
First month's interest = $200,000 × (5% ÷ 12) = $200,000 × 0.004167 = $833.33. The remaining $1,073.64 − $833.33 = $240.31 reduces principal. Early mortgage payments are heavily weighted toward interest, with principal paydown increasing gradually over the amortization period.
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