Real Estate Math
A Massachusetts landlord deposits a $2,400 security deposit and $2,400 last month's rent. After one year at 5% interest, what is the total interest owed to the tenant?
A$240✓ Correct
B$120
C$480
D$360
Explanation
Interest on security deposit = $2,400 × 5% = $120. Interest on last month's rent = $2,400 × 5% = $120.
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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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