A Florida homeowner has a $280,000 mortgage with a 6.25% annual interest rate. They want to calculate their monthly interest payment for the first month. What is the monthly interest portion?
Correct Answer
A) $1,458.33
Correct: ($280,000 × 6.25%) ÷ 12 months = $17,500 ÷ 12 = $1,458.33. Option B ($1,475) uses incorrect interest calculation. Option C ($1,491.67) uses wrong annual rate calculation. Option D ($1,508.33) miscalculates the monthly division.
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Related Topics & Key Terms
Key Terms:
Related Concepts
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
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.
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