Arizona Real Estate License Practice Exam

To determine the balance of Mark's loan after his second payment, it's essential to first calculate how much of each monthly payment goes toward interest and how much goes toward the principal.

Given a loan amount of $165,000 at an annual interest rate of 4.75%, we first convert the annual interest rate to a monthly rate:

1. Calculate the monthly interest rate:

- 4.75% annual interest divided by 12 months = approximately 0.3958% per month.

2. Convert this percentage into a decimal for calculations:

- 0.3958% / 100 = 0.003958.

Now, we calculate the interest for the first payment:

3. Monthly interest for the first month:

- Loan balance ($165,000) × monthly interest rate (0.003958) = $652.27 (approximately).

4. Determine how much of the first payment goes toward the principal:

- Monthly payment ($860.72) - interest ($652.27) = $208.45 (approximately).

5. Subtract the principal portion from the initial loan amount to find the remaining balance after the first payment:

- Initial loan balance ($165,000) - principal paid