Question

You purchase a home for $253,600.00 with a mortgage rate of 3.75% APR. How much interest is due after your first month?
(1 point)
Responses

$79.25
$79.25

$660.42
$660.42

$792.50
$792.50

$951.00

Answer 1

To calculate the interest due after the first month on a mortgage, you can use the formula:

\[
\text{Monthly Interest} = \text{Principal} \times \frac{\text{Annual Interest Rate}}{12}
\]

In this case:
- Principal = $253,600.00
- Annual Interest Rate = 3.75% = 0.0375

Now plug in the values:

\[
\text{Monthly Interest} = 253,600 \times \frac{0.0375}{12}
\]

Calculating the values step by step:

1. Calculate the monthly interest rate:
\[
\frac{0.0375}{12} = 0.003125
\]

2. Calculate the first month's interest:
\[
\text{Monthly Interest} = 253,600 \times 0.003125 = 792.50
\]

So the interest due after the first month is **$792.50**.