Real Estate Math
A property sold for $310,000 five years ago. If it appreciated 4% annually (simple interest), what is it worth today?
A$372,000✓ Correct
B$369,200
C$362,000
D$373,000
Explanation
Simple interest appreciation: $310,000 × (1 + 0.04 × 5) = $310,000 × 1.
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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.
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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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