1. Using an amortization factor of 4.77415 per $1,000 (30 years at 4%), what is the monthly principal and interest payment on a $250,000 loan?
Answer & explanation
Answer: D. $250,000 / $1,000 = 250; 250 x 4.77415 = $1,193.54.
math
principal and interest
The portion of a mortgage payment that repays the loan balance (principal) and pays the lender for the use of money (interest). In a fully amortized fixed-rate loan, the combined payment stays the same, but early payments are mostly interest. Interest for a month is usually figured on the remaining balance, with the rest of the payment reducing principal.
- Exam tip
- To find how much of a payment goes to principal: balance times annual rate divided by 12 equals that month's interest; payment minus interest equals principal.
- Example
- On a $200,000 balance at 6%, monthly interest is $1,000; with a $1,199 payment, $199 reduces principal.
Related terms & state variants
Sources
Source verification pending. Confirm current requirements with your state regulator.
Last verified: 2026-10-23