A borrower has a 30-year fixed-rate mortgage with a principal balance of $200,000 and an interest rate of 6% annually. What is the monthly interest payment for the first month?
Correct Answer
A) $1,000
Monthly interest is calculated by multiplying the outstanding principal balance by the annual interest rate, then dividing by 12 months. $200,000 × 0.06 ÷ 12 = $1,000. This is a fundamental calculation for understanding how mortgage payments are allocated between principal and interest.
Why This Is the Correct Answer
Monthly interest is calculated by multiplying the outstanding principal balance by the annual interest rate, then dividing by 12 months. $200,000 × 0.06 ÷ 12 = $1,000. This is a fundamental calculation for understanding how mortgage payments are allocated between principal and interest.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
People Also Study
Federal Mortgage-Related Laws
23% of exam
Mortgage Loan Origination Activities
25% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam
Previous Question
In January 2024, the baseline conforming loan limit increased. A borrower applied for a loan in December 2023 for $700,000 but didn't close until February 2024. The property is in an area where the limit increased from $690,000 to $750,000. Which loan limit applies?
Next Question
During closing, the borrower notices the property taxes shown on the Closing Disclosure are $200 higher per month than disclosed on the Loan Estimate due to a recent tax assessment. This increases the debt-to-income ratio from 42% to 44%. What action is required?