What is the scheduled principal payment (SP) for Month 2 of a residential mortgage with an...
- What is the scheduled principal payment (SP) for Month 2 of a residential mortgage with an initial balance of $200,000, coupon rate =7.2%, and an original maturity of 15 years?
Homework Answers
First we compute the monthly payment as below
Using financial calculator
Input:
PV = 200000
I/Y = 7.2/12
N = 15*12 = 180
Solve for PMT =1820.09
The month 1 interest = 200000*7.2%/12 = 1200
Hence year 1 principal balance = 200000- (1820.09-1200) = 199379.91
month 2 interest = 199379.91*7.2%/12 = 1196.28
Month 2 principal = 1820.09-1196.28 = $623.81
Answer = $623.81
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