Real Estate Math

A Maine homeowner refinances from a $250,000, 30-year loan at 7% (payment $1,663/month) to a $250,000, 20-year loan at 5.5%. If the new payment is $1,714/month, how much extra principal is paid over the old loan in the first year?

A$204
B$408
C$612✓ Correct
D$816

Explanation

Monthly extra payment = $1,714 − $1,663 = $51. Annual extra = $51 × 12 = $612. To solve this, multiply the relevant values: $250,000, and $1,663 at 7%.. The correct answer is $612.. This is a common calculation on the Maine real estate exam.

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