Question

Carrie and Steve agree to a $149,000 mortgage at 5.5% annual interest for 30 years. They have a monthly payment of $846.01 and the interest paid in month one is $682.92. Assuming they only make the minimum payment in month one, what do you know about their loan?

Answer 1

They make the minimum payment in month one, which is just the interest from the value of the mortgage. That means that the initial $149.000 has no change, if the value of the mortgage has no change, and the interest neither, then the interest in month two will be $682.92.