Real Estate Math
A borrower takes out a $200,000 mortgage at 6% annual interest for 30 years. What is the monthly interest for the first payment?
A$1,000✓ Correct
B$833.33
C$1,199.10
D$600
Explanation
Monthly interest = Principal × (Annual Rate / 12) = $200,000 × (6% / 12) = $200,000 × 0.005 = $1,000. The first payment is mostly interest; the principal reduction is very small. Over time, the interest portion decreases as the principal balance is reduced.
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