Question

If a mortgage loan is made for $70,000 at 11.5% interest for a period of 25 years, and the monthly PI payment is $711.53 plus $75.47 for taxes and insurance making the total payments $787.00, what is the interest charge for the second monthly payment?

Answer 1

Step-by-step explanation:

this problem can be solved thinking as a different payment the 75.47 bucause it is used for paying money which does not affect the money owed for loan, so:

Calculating the monthly rate:

`i=(1+0.115)^{(1)/(12) }-1`

`i=0.9\%`

First Month:

Interest=70,000*0.9%

Interest=637,87

Remaining balance=70,000 -(711,53-637.87)

Remaining balance=69,926

Second Month:

Interest=69,926*0.9%

Interest=629,33