Question

Jaclyn and Henry secured a $225,000 mortgage at 5% annual interest for 20 years. This results in a monthly payment of $1484.90 and the interest paid in month one is $937.50.

Assume they only make the minimum payment each month.

The beginning balance for month two is $224,452.60.

How much interest is owed in month two?

Answer 1

Answer:

  $935.22

Step-by-step explanation:

You want the interest due after 1 month on a balance of $224,452.60 if the annual rate is 5%.

Interest

The interest is given by ...

  I = Prt

where P is the loan balance, r is the annual rate, and t is the number of years. Here, that is ...

  I = 224,452.60×0.05×(1/12) . . . . . . . . one month is 1/12 year

  I ≈ 935.219167 ≈ 935.22

The interest owed in month 2 of the loan is $935.22.