Real Estate Math
A Rhode Island buyer makes a 20% down payment on a $425,000 home. How much is the mortgage loan amount?
A$315,000
B$330,000
C$340,000✓ Correct
D$355,000
Explanation
Down payment: $425,000 x 0.20 = $85,000.
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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.
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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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