Real Estate Math
A Wisconsin home depreciates at 4% annually. If it was worth $300,000 initially, what is its estimated value after 3 years?
A$258,048
B$262,144
C$264,000✓ Correct
D$265,356
Explanation
Value after year 1: $300,000 × 0.96 = $288,000.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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.
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