Question

Your parent’s mortgage is $231,450 at a 4.65% APR. If they pay $2,236 toward the mortgage each month, how much of the second month's payment is applied toward the second month's principal?
(1 point)
Responses

$2,678.26
$2,678.26

$4,437.34
$4,437.34

$1,339.13
$1,339.13

$1,344.32

Answer 1

Monthly rate = 0.0465/12 = 0.003875.

1) First-month interest = 231,450 × 0.003875 = 896.86875.
First-month principal = 2,236 − 896.86875 = 1,339.13125.
New balance = 231,450 − 1,339.13125 = 230,110.86875.

2) Second-month interest = 230,110.86875 × 0.003875 = 891.6796164.
Second-month principal = 2,236 − 891.6796164 = 1,344.3203836 ≈ $1,344.32.

Answer: $1,344.32.