Real Estate Math
A buyer purchases a home at a 4% interest rate when the market rate is 6%. The seller carried back financing at the below-market rate. If the $350,000 seller-financed loan had been at 6%, the monthly P&I payment factor is $6.00/$1,000 vs $4.77/$1,000 at 4%. What is the monthly savings?
A$430.50✓ Correct
B$378.00
C$275.00
D$351.00
Explanation
Monthly payment at 6%: ($350,000 ÷ $1,000) × $6.00 = 350 × $6.00 = $2,100. Monthly payment at 4%: 350 × $4.77 = $1,669.50. Monthly savings = $2,100 – $1,669.50 = $430.50.
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