Finance (alternative)
A Maryland buyer borrows $425,000 at 6.75% for 30 years. Using a monthly payment factor of $6.49 per $1,000, the monthly P&I is approximately:
A$2,558.25
B$2,758.25✓ Correct
C$2,758
D$2,908
Explanation
Monthly P&I = ($425,000 ÷ 1,000) × $6.49 = 425 × $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.
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.
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.
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