Real Estate Math

What is the annual interest on a $450,000 mortgage at 6.5% interest (first month only)?

AA. $2,000
BB. $2,437.50
CC. $29,250✓ Correct
DD. $24,375

Explanation

Monthly interest = Principal × Annual Rate / 12 = $450,000 × 0.065 / 12 = $450,000 × 0.005417 = $2,437.50. Annual interest (first year, approximate) = $450,000 × 6.5% = $29,250.

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