A South Carolina homebuyer purchases a property for $320,000 and obtains a conventional mortgage for 80% of the purchase price at an annual interest rate of 6%. The first monthly payment is due one month after closing. Using simple interest calculation for the first month only, what is the interest portion of the first monthly mortgage payment?
Correct Answer
B) $1,280
Step 1 — Calculate the loan amount: $320,000 × 80% = $256,000. Step 2 — Calculate annual interest: $256,000 × 6% = $15,360. Step 3 — Calculate monthly interest (first payment): $15,360 ÷ 12 = $1,280. The interest portion of the first monthly payment is $1,280.
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