Question

John and Peggy recently bought a house. They financed the house with a $150,000, 30-year mortgage with a nominal interest rate of 6.68%. Mortgage payments are made at the end of each month. What total dollar amount of their mortgage payments during the first 4 years will go towards repayment of principal?

Answer 1

$ 7,181.45

Step-1:Calculation of monthly payment
Monthly Payment	=-pmt(rate,nper,pv,fv)
	= $ 965.93
Where,
rate	=	Monthly Interest rate	=	6.68%/12	=	0.005566667
nper	=	Number of period	=	30*12	=	360
pv	=	Initial cash flow		=	$       1,50,000
fv	=	Future cash flow		=	0
Step-2:Calculation of loan value at the end of 4 years
Loan value at the end of 4 years	=pv(rate,nper,pmt,fv)
	= $ 1,42,818.55
Where,
rate	=	Monthly Interest rate	=	6.68%/12	=	0.005566667
nper	=	Number of period	=	(30-4)*12	=	312
pmt	=	Monthly cash flow		=	$         -965.93
fv	=	Future cash flow		=	0
Step-3:Calculation of principal repayment over 4 years
Principal repayment over 4 years	=	Loan value at the beginning	-	Loan value at the end of 4 years
	=	$ 1,50,000.00	-	$ 1,42,818.55
	=	$       7,181.45