Finance
A Washington home buyer is using a conventional loan with 20% down and an 80% LTV. Their loan is $480,000 at 6% for 30 years. Using a monthly payment factor of $6.00 per $1,000, what is the monthly P&I payment?
A$2,880✓ Correct
B$3,000
C$2,400
D$2,640
Explanation
Monthly P&I = ($480,000 ÷ $1,000) × $6.00 = 480 × $6.
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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.
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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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