Finance
What is a 'mortgage constant' and how is it used in Rhode Island investment analysis?
AThe fixed interest rate on a 30-year mortgage
BThe annual payment (principal and interest) per dollar of mortgage debt, used to calculate annual debt service✓ Correct
CThe minimum payment required under a HELOC
DThe constant amount of principal paid each month
Explanation
The mortgage constant is the ratio of annual debt service (P&I) to the original loan amount. Multiplying the mortgage constant by the loan amount gives the annual debt service, useful in income property analysis.
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