Real Estate Math
A Nevada borrower has a $350,000 mortgage at 6.5% for 30 years. Using the factor table, the monthly payment factor is $6.32 per $1,000. What is the monthly principal and interest payment?
A$1,904
B$2,212✓ Correct
C$1,750
D$2,000
Explanation
Monthly payment = (Loan amount ÷ $1,000) × payment factor = ($350,000 ÷ $1,000) × $6.32 = 350 × $6.
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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.
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.
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.
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