Real Estate Math
A North Dakota buyer borrows $250,000. The lender requires 2 months of PITI as cash reserves. The monthly PITI is $1,875. What minimum reserves are needed?
A$1,875
B$3,750✓ Correct
C$5,000
D$7,500
Explanation
Required reserves = Monthly PITI × Number of months = $1,875 × 2 = $3,750. Lenders often require borrowers to have sufficient liquid assets remaining after closing to cover 2-6 months of housing payments, demonstrating financial stability.
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