Real Estate Math
A buyer obtains a 30-year mortgage for $250,000 at 7% interest. Using a factor of $6.65 per $1,000 borrowed, what is the approximate monthly P&I payment?
A$1,494.50
B$1,612.50
C$1,662.50✓ Correct
D$1,712.50
Explanation
Monthly payment = ($250,000 ÷ $1,000) × $6.65 = 250 × $6.
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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.
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.
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