Florida Real Estate Broker ExaminationReal Estate CalculationsMedium
A real estate investor purchased a property for $350,000. They financed 80% of the purchase price with a loan. If the loan constant is 0.0075 and the loan term is 30 years, what is the investor's monthly mortgage payment?
- A$2,250
- B$2,800
- C$2,625
- D$2,100
Show answer & explanationAnswer & explanation
Correct answer: D. $2,100
First, calculate the loan amount (80% of $350,000). Then, multiply the loan amount by the loan constant to find the monthly mortgage payment.
Why the other options are wrong
- A. This is likely a result of an incorrect loan amount or a calculation error with the constant.
- B. This could be a result of multiplying the full purchase price by the loan constant or other miscalculations.
- C. This might result from using the full purchase price instead of the loan amount, or a calculation error.
Loan Constant
A factor used to quickly calculate monthly mortgage payments, representing the payment per dollar of loan amount for a given interest rate and term.
- Expressed as a decimal.
- Multiplied by loan amount.
- Simplifies payment calculation.
Memory trick: Loan amount times the constant is your monthly cost.