California Real Estate Practice Exam

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After the first month's payment on a fully amortized mortgage loan of $165,000 at an interest rate of 6.5% for 30 years, what is the balance of the principal?

$164,955.55
$163,955.55
$164,500.00
$165,000.00

The correct answer is: $163,955.55

After the first month's payment, the balance of the principal would be slightly lower than the original loan amount of $165,000. This is because the payment goes towards both the principal and interest, but more towards the interest in the beginning of the loan. Option A is incorrect because it does not take into account the interest that accrued during the first month. Option C is incorrect because it assumes the entire payment went towards the principal, which is not the case in a fully amortized loan. Option D is incorrect because it is the original loan amount and does not reflect any payments made.