Real Estate Math
The annual debt service (ADS) on a $400,000 loan is $27,500. What is the mortgage constant?
A5.5%
B6.25%
C6.875%✓ Correct
D7%
Explanation
Mortgage constant = ADS ÷ Loan amount = $27,500 ÷ $400,000 = 0.06875 = 6.875%. Using the values given ($400,000, $27,500), apply the appropriate formula.. The correct answer is 6.875%.. This is a common calculation on the Arkansas real estate exam.
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