Real Estate Math
A Vermont buyer makes a $450,000 purchase with 25% down. What is the down payment and loan amount?
ADown: $90,000; Loan: $360,000
B$337,500✓ Correct
CDown: $100,000; Loan: $350,000
DDown: $125,000; Loan: $325,000
Explanation
Down payment = $450,000 × 0.25 = $112,500.
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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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