Use estimation to select the best response. Do not calculate. A $49,000 30-year loan at 10% + 0.5 point + $150 origination fee would require what monthly income for the buyer?
A) $1,500
B) $4,000
C) $16,500
D) $5,000
E) $450

Question

Quizplus · Accepted Answer

The monthly payment for a $49,000 loan at 10% interest over 30 years would be a significant portion of the loan amount but not overwhelmingly high. Estimating the monthly payment to be around 1/3 to 1/4 of the loan amount annually, the required monthly income would need to be at least 3 to 4 times the monthly payment to comfortably afford the loan, making $1,500 a reasonable estimate without exact calculation.

Use Estimation to Select the Best Response