Question

Your mortgage is $135,400.00 at a 5.25% APR. If you pay $1,500.00 towards the mortgage each month, how much of your second month's payment is applied to the principal?
(1 point)
Responses

$1,815.25
$1,815.25

$315.25
$315.25

$911.60
$911.60

$1,184.75
$1,184.75

Answer 1

Monthly rate = 5.25%/12 = 0.004375.

1) First-month interest = 135,400 × 0.004375 = $592.38 (≈592.375).
Principal paid 1st month = 1,500 − 592.375 = $907.625.

2) New balance = 135,400 − 907.625 = 134,492.375.
Second-month interest = 134,492.375 × 0.004375 = $588.40 (≈588.4041).
Principal portion 2nd month = 1,500 − 588.4041 ≈ $911.60.

Answer: $911.60.