Finance
An Oregon seller agrees to carry back a second trust deed for $50,000 at 6% interest, interest only, due in 5 years. What is the seller's annual interest income?
A$2,500
B$3,000✓ Correct
C$3,500
D$4,000
Explanation
Annual interest = Principal × Rate = $50,000 × 0.06 = $3,000 per year.
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Key Terms to Know
Deed
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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