Question

A seller of a property, listed at $200,000, accepted a 90% offer. The home appraised at $185,000 and the buyers obtained a loan for 85% for 30 years at 5% interest. What is the first month's interest?

Answer 1

Answer:

$ 637.5

Explanation:

The listed value = $ 200000

the seller accept an offer of 90 % = 0.9 × 200000 = $ 180000

the house was appraised for $ 185000 and lenders always prefer to use the lesser value

the buyer obtained a loan of  85% = 0.85 × 180000 =  $ 153000

amount paid per year = $ 153000 × 0.05 = $ 7650

first month payment = 7650 / 12 = $ 637.5