Question

You have 250 months left on your 30 year (= 360 month), $400,000 mortgage.  The monthly interest rate is .004. What is your monthly payment? What part of your payment goes to principal?

	a.	Payment $1767.23.  To principal $937.17
	b.	Payment $3119.56, To principal $1134.87
	c.	Payment $2098.67, To principal $772.05
	d.	None of these

You now have 50 payments left on that 30 year $400,000 mortgage at r = .004. What part of your payment is now devoted to principle?

	a.	$781.50
	b.	$1712.82
	c.	$1893.17
	d.	None of these

Answer 1

Solution:

Part A )

We can create the amortization table to answer the following question.

When we have 250 months left that means that we have made the payment till 110th month.

Monthly payment = $2098.66

Principle repayment = $770.51

Part A )

The correct answer is C) Payment $2098.67, To principal $772.05

This answer is slightly different than the actual amortization table and this might be due to the rounding off issue.

Part B)

When 50 months are left then we have made the payment till 310th month and principal repayment is 1712.08

The closest option is B and it should be the correct answer

B) 1712.82