Finance
A Minnesota homebuyer obtains an FHA loan for $225,000 at 4.5% interest. What is the approximate annual interest for the first year?
A$9,125
B$10,125✓ Correct
C$11,250
D$8,100
Explanation
Annual interest = Loan amount x Interest rate = $225,000 x 4.5% = $225,000 x 0.045 = $10,125. This is the approximate first-year interest on a simple interest basis. FHA loans are popular in Minnesota due to lower down payment requirements of 3.5%.
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