Real Estate Math
A Louisiana lender requires a minimum down payment of 5% on a $225,000 purchase. The minimum down payment is:
A$10,000
B$11,250✓ Correct
C$15,000
D$22,500
Explanation
Minimum down payment = $225,000 × 5% = $11,250. To solve this, multiply the relevant values: $225,000 at 5%..
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Key Terms to Know
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.
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.
Math Concepts
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