A California borrower obtains a $500,000 deed of trust at 6% annual interest. The monthly payment is $2,998. After the first monthly payment, what is the new principal balance?
Correct Answer
C) $499,502
First month interest = $500,000 × 6% ÷ 12 = $2,500. Principal paid = $2,998 − $2,500 = $498. New balance = $500,000 − $498 = $499,502.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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