Real Estate Math
A Delaware investment property requires a 10% down payment. If the buyer's maximum loan is $405,000, what is the maximum property price they can afford?
A$425,000
B$440,000
C$450,000✓ Correct
D$460,000
Explanation
If loan = 90% of price, then price = loan ÷ 0.90 = $405,000 ÷ 0.
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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.
AmortizationThe 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.
Math Concepts
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