Real Estate Math
What is the monthly interest on a $380,000 mortgage at 5.25% annual interest?
A$1,662.50✓ Correct
B$1,995.00
C$1,912.50
D$1,750.00
Explanation
Monthly interest = $380,000 × (5.25% ÷ 12) = $380,000 × 0.
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Key Terms to Know
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
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