Your 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 for the second month?
First, we need to calculate the amount of the mortgage. Since your parents are making a 20% down payment, they are financing $150,000 ($187,500 - 20%).
Next, we need to calculate the monthly interest rate. The annual interest rate is 4.65%, so the monthly interest rate is 4.65% / 12 = 0.3875%.
To calculate the interest paid for the second month, we first need to calculate the interest for the first month. The interest for the first month is the outstanding mortgage amount from the previous month multiplied by the monthly interest rate. In this case, the outstanding mortgage amount from the previous month is $150,000 and the monthly interest rate is 0.3875%, so the interest for the first month is $150,000 * 0.003875 = $581.25.
For the second month, the interest paid will be slightly less because the outstanding mortgage amount has decreased after the first month's payment. To calculate the interest for the second month, we take the new outstanding mortgage amount after the first month's payment and multiply it by the monthly interest rate.
The new outstanding mortgage amount after the first month's payment is $150,000 - $1,575 (monthly payment) = $148,425. Therefore, the interest paid for the second month is $148,425 * 0.003875 = $576.09.
So, the interest paid for the second month is $576.09.