Real Estate Math
A buyer in Rhode Island pays $380,000 for a home. Two years later, it is appraised at $418,000. What is the percentage increase in value?
A8.5%
B9.5%
C10%✓ Correct
D11.5%
Explanation
Increase: $418,000 - $380,000 = $38,000. Percentage: $38,000 / $380,000 = 0.
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Key Terms to Know
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.
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.
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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