our parents are buying a house for $187,500. They have a good credit rating, are making a 20% down payment, and expect to pay $1,575/month. The interest rate for the mortgage is 4.65%. How much interest is paid at the end of the second month?
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To find out how much interest is paid at the end of the second month, we first need to calculate the monthly interest rate.
Monthly interest rate = Annual interest rate / 12
Monthly interest rate = 4.65% / 12
Monthly interest rate = 0.003875
Next, we need to calculate the interest paid in the second month.
Interest paid in the second month = Previous balance x Monthly interest rate
Interest paid in the second month = (Total loan amount - Down payment) x Monthly interest rate
Interest paid in the second month = ($187,500 - $37,500) x 0.003875
Interest paid in the second month = $150,000 x 0.003875
Interest paid in the second month = $581.25
Therefore, at the end of the second month, $581.25 in interest is paid.