Real Estate Math
A Texas homeowner has a $250,000 mortgage at 5% for 30 years. If the monthly payment is $1,342.05, how much interest is paid in the first month?
A$1,041.67✓ Correct
B$1,342.05
C$300.38
D$833.33
Explanation
Monthly interest = $250,000 × (5% / 12) = $250,000 × 0.004167 = $1,041.67. Principal paid in first month = $1,342.05 – $1,041.67 = $300.38. In the early months of a loan, the majority of each payment is interest.
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