A Florida investor is purchasing a duplex for $280,000 using seller financing. The terms are 20% down, with the balance financed at 7% annual interest, amortized over 25 years. What is the monthly principal and interest payment? (Use: Monthly payment factor for 7%, 25 years = 7.07 per $1,000)
Correct Answer
A) $1,578.56
$1,578.56 is correct. Loan amount: $280,000 × 0.80 = $224,000. Monthly payment: ($224,000 ÷ $1,000) × 7.07 = 224 × 7.07 = $1,578.56. Option B is incorrect as it uses the wrong loan amount calculation. Option C is incorrect as it uses the full purchase price instead of the loan amount. Option D is incorrect as it uses an incorrect payment factor.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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