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 Post subject: Small problem need help withPosted: Sat, 28 Aug 2010 01:57:20 UTC
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Joined: Sat, 28 Aug 2010 01:35:12 UTC
Posts: 1
Hello,
Forgive me for my english and will do my best to make this understandable.
I'm preparing for a real estate exam and having trouble with the math part of it. Unfortunately mathematics has never been my forte.

The question i was presented with is as follow:

When Branham brought his property he had a 20% down payment and
secured a 30 year loan at 7% interest. If his first monthâ€™s interest was
\$787.50, how much did he pay for the property?
A. \$135,000
B. \$140,625
C. \$168,750
D. \$158,250

I'm sure there is a formula, given the down payment pewrcentage , monthly interest rate etc... , to solve this.
I figured that since it's \$ 787.50 a month interests that will be \$9450 a month and \$283.500 at the end fo the 30 years loan term.
I tryed to figure out how much the 20% down payment was. I figured since one of those values ( A B C D ) is the price he payed for the house I tried them all=)
When i got to \$ 140.625 I did 20% of this and came to\$28.125 and i figured this was the down payment.
I now know the correct answear is \$168.750 and oddly enough \$140.625+28.125 = \$168.750.
So is 28.125\$ the down payment? if so how in the hell did i came up with the 20% down payment from \$140.625?
Also how is it possible that Branham paid the property \$168.750 when just of interest in 30 years it comes to \$283.500?
Maybe I'm thinking of a mortage and a loan is a little different?

But If i ask a bank for a mortgage on a property valued at \$168.750 and I'm only able to put down a 20% down payment , wich comes to \$33.750.
168.750-33.750= \$135.00 So i have a mortgage on \$135.000 at 7% interest rate on 30 years.
Since I'm paying \$283.500 in 30 years of interests alone at the end I will be paying this property \$418.500 and not \$168.750.
In other words are they asking me for the original price of the property before the interests? But i thought they asked for how much he will pay for the property and that can vary depending if Branham decides to pay off the loan at 2 years or at 5 years or at 15 years etc... The final price can change with a mortgage.
I'm confused if any can shed some light I will be greatfull.

Thanks in advanced and pardon for my spelling.

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 Post subject: Posted: Sat, 28 Aug 2010 06:51:33 UTC
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