Real Estate Math
A Delaware commercial property is purchased for $1,200,000 with a 35% down payment. What is the equity at purchase?
A$380,000
B$420,000✓ Correct
C$450,000
D$480,000
Explanation
Equity = Purchase Price × Down Payment % = $1,200,000 × 0.35 = $420,000.
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Key Terms to Know
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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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