Real Estate Math
A Hawaii property valued at $450,000 appreciates at 4% annually. What is the value after 2 years?
AA. $486,000
BB. $486,720✓ Correct
CC. $468,000
DD. $487,200
Explanation
Year 1: $450,000 × 1.04 = $468,000.
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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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