Real Estate Math
A Massachusetts property owner takes out a $200,000 equity line at 8% annual interest. They draw the full amount on January 1. How much interest accrues in the first month?
A$1,333.33✓ Correct
B$1,600.00
C$16,000.00
D$2,000.00
Explanation
Monthly interest = $200,000 × (8% ÷ 12) = $200,000 × 0.006667 = $1,333.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
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.
Math Concepts
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