A borrower makes a monthly payment of $1,500 on their fixed-rate mortgage. If $1,200 goes toward interest, how much principal is paid down that month?
Correct Answer
C) $300
In a fixed-rate mortgage payment, the total payment is split between principal and interest. If the total payment is $1,500 and interest is $1,200, then principal payment = $1,500 - $1,200 = $300. This demonstrates the basic allocation of mortgage payments between principal and interest components.
Why This Is the Correct Answer
In a fixed-rate mortgage payment, the total payment is split between principal and interest. If the total payment is $1,500 and interest is $1,200, then principal payment = $1,500 - $1,200 = $300. This demonstrates the basic allocation of mortgage payments between principal and interest components.
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