Real Estate Math
An Idaho buyer obtains a 30-year loan at 7% interest. Using the factor of $6.65 per $1,000 borrowed, what is the monthly P&I payment on a $285,000 loan?
A$1,775.25
B$1,845.25
C$1,895.25✓ Correct
D$1,955.25
Explanation
Monthly payment = (Loan Amount / $1,000) x Factor = ($285,000 / $1,000) x $6.65 = 285 x $6.
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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.
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.
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.
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