For a $345,000 mortgage with an interest-only payment structure, what is the typical payment amount?

In an interest-only payment structure, the borrower is only required to pay the interest on the principal amount of the mortgage, rather than making payments toward the principal. The payment amount can be calculated using the formula:

[ \text{Interest Payment} = \text{Principal} \times \text{Interest Rate} / \text{Number of Payments per Year} ]

To determine if the choice of $623.49 is accurate, one must assume a typical interest rate and perform the calculation based on that rate.

For instance, if we consider a common interest rate of 4.5% per annum, you would compute it as follows:

1. Convert the interest rate to a monthly format: ( 4.5% = 0.045/12 = 0.00375 ).

2. Calculate the interest for one month: ( 345,000 \times 0.00375 = 1,293.75 ).

This calculated interest amount would not equate to $623.49, indicating that the typical payment amount relates to a different rate or payment structure.

While $623.49 appears to be lower than what would be expected from a standard interest-only payment, it could represent a scenario