Real Estate Math
The interest rate is 6.5% annually. A $165,000 loan has been outstanding for one year. How much interest accrued?
A$10,725✓ Correct
B$9,900
C$10,395
D$11,050
Explanation
$165,000 × 6.5% = $10,725 annual interest.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
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