How much of a mortgage payment is allocated to interest in the first year for a mortgage of $295,000 at 6.65% over 15 years?

To determine how much of a mortgage payment is allocated to interest in the first year for a mortgage of $295,000 at an interest rate of 6.65% over 15 years, we first need to calculate the annual interest for the first year.

The formula for interest in the first year is straightforward:

1. Multiply the loan amount by the interest rate to find the first year's interest.

2. For a mortgage of $295,000 at 6.65%, the annual interest would be calculated as follows:

Interest = Principal × Interest Rate

= $295,000 × 0.0665

= $19,601.25

This amount represents the interest paid during the first year.

To further clarify, when making a mortgage payment, especially in the early years, a larger portion of the payment goes towards paying interest rather than the principal. This is due to the amortization structure of mortgages, where interest is computed on the outstanding principal balance. As payments progress, the interest component decreases, and more of the payment is allocated to the principal.

Thus, the first year's interest calculation aligns perfectly with the answer provided, indicating that the amount allocated to interest in the first year is indeed $