New Jersey Real Estate License Exam Practice Question
A borrower has a $50,000 mortgage balance. The monthly payment on this loan is $854 and includes interest in arrears at the nominal rate of 9.5% per annum. What is the approximate loan balance after the next monthly payment?
Correct Answer: B
Rationale: To determine the loan balance after the next monthly payment, we first calculate the interest accrued on the $50,000 balance for one month at an annual rate of 9.5%. This monthly interest is approximately $395.83 ($50,000 * 0.095 / 12).
Next, we subtract this interest from the monthly payment of $854. The principal repayment is $854 - $395.83 = $458.17.
Subtracting this principal repayment from the original balance gives us $50,000 - $458.17 = $49,541.83, making option B the correct choice.
Options A, C, and D do not accurately reflect the calculations, leading to incorrect loan balances.
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