Real Estate Math
A house appreciates at 4% per year. If it is worth $300,000 today, what will it be worth in 3 years?
A$312,000
B$324,000
C$336,000
D$337,459✓ Correct
Explanation
Using compound appreciation: $300,000 x (1.04)^3 = $300,000 x 1.
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Key Terms to Know
Amortization
The 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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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