Real Estate Math
A Mississippi buyer is purchasing a $250,000 home with 20% down. Their lender requires 2 months PITI in reserves after closing. PITI is $1,450/month. Required reserves are:
A$1,450
B$2,900✓ Correct
C$4,350
D$5,800
Explanation
Required reserves = 2 months × PITI = 2 × $1,450 = $2,900. Lenders often require borrowers to maintain a certain number of months of PITI in liquid reserves after the down payment and closing costs, demonstrating the ability to make mortgage payments even if income is disrupted.
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