Payments & Interest

Front

What is a down payment?

Back

A down payment is an initial payment made when purchasing a big-ticket item, such as a house, typically expressed as a percentage of the total purchase price.

Front

How do you calculate a down payment?

Back

To calculate a down payment, multiply the total purchase price by the required percentage of the down payment.

Front

If a house costs $269,000 and the down payment is 15%, how much is the down payment?

Back

$40,350

Front

What is the formula to find the down payment amount?

Back

Down Payment Amount = Total Price × Down Payment Percentage.

Front

What does a 15% down payment mean?

Back

A 15% down payment means that the buyer must pay 15% of the total price upfront when purchasing the property.

Front

What is the significance of a down payment in a mortgage?

Back

A down payment reduces the loan amount needed and shows the lender that the buyer is financially responsible.

Front

What is the difference between a down payment and closing costs?

Back

A down payment is the initial payment made towards the purchase price, while closing costs are fees associated with finalizing the mortgage.

Front

What is the impact of a larger down payment on monthly mortgage payments?

Back

A larger down payment typically results in lower monthly mortgage payments and less interest paid over the life of the loan.

Front

What is the relationship between down payment percentage and loan-to-value ratio (LTV)?

Back

The loan-to-value ratio is the percentage of the property's value that is financed through a mortgage; a higher down payment results in a lower LTV.

Front

What is interest in the context of loans?

Back

Interest is the cost of borrowing money, usually expressed as a percentage of the loan amount.