Mathematics Flashcards
Overview of Mathematics
Convert percent to decimal and decimal to percent
Solve for the Part, The Rate, and the Whole% problems
Determine which variables are given and the method to use to find the answer
Work through a multi-part problem to find a solution
Perform basic math calculations. Essential to the transaction of real estate
Percentage Problems
The answer to a percentage problem is one of 3 variables
- Part of the whole
- The Whole
- Percent Rate of a whole
P= R x W
Part is equal to the Rate multiplied by the Whole.
In percentage problems , 2 of the 3 variables are given.
To answer the problem, identify which 2 variables are present and determine the proper method to solve for the third.
Part P \_\_\_\_\_\_\_\_\_\_\_\_\_\_ Whole. |. Rate W. |. R
When Part is unknown, multiply
Rate x Whole.
When the Part is known, divide
To find R, then divide Part by Whole
To find W then divide Part by Rate
Percentage math tips
1. Multiplying by % of less than 100% , the answer will always be smaller than original number
- Dividing by % of less than 100% , the answer will always be greater than original number!
Finance formulas
Loan to Value Ratio (LTV RATIO)
Typically the sales price or appraised value is known and the loan amount needs to be calculated.
The loan amount is based on LTV ratio.
This ratio, as expressed as a percentage, is the mathematical relationship between the amount the lender will lend and the selling price or appraised value of the property, whichever is less. The resulting percentage is the LTV ratio:
The formula is:
Loan= % x value ( or sales price whichever is less)
LOAN TO VALUE RATIO
Loan P \_\_\_\_\_\_\_\_\_\_\_\_\_. Works the same as P= R x W Value. |. Rate W. |. R
Loan = Rate x Value Rate= divide loan by Value Value= divide loan by Rate
Down payment
Down payment = (100% - LTV%). X Value (sales or appraised value)
Identify the variables:
80%. ®
90,000. (W)
Loan fees (or Points)
Fees
P
_______________
Loan amt|. Points
W. |. R. Loan Fees= points x loan amt
Points= divide fees by loan amt.
Loan Amt = divide fees by points
Identify the variables
INTEREST
USUALLY EXPRESSED AS AN ANNUAL PERCENTAGE WHICH IS CALLED THE INTEREST RATE.
When using formula make sure the interest is annual( one year)
Annual interest ℗ = Rate ® x loan Balance (w)
P= W x R. To find. Annual Interest :multiply whole by rate. R= to find rate , divide. Annual interest Rate by Loan W=. To find loan, divide annual interest Nuuanu rate
Interest
Note that interest in the formula is annual interest.
Therefor before solving any interest problem, be sure the interest is for 1year.
If NOT, YOU MUST CONVERT:
If given monthly interest, multiply it by 12
If given quarterly interest, multiply by 4
If given interest for 5 years, DIVIDE IT BY 5
If the problem is to determine the interest for a period of other than a year, solve the problem, to find the annual interest then
Convert the answer accordingly.
If you are told the total interest paid and need to determine the length of time
Solve the problem to determine annual interest
Divide annual interest by total interest to get the numbers of years paid.
You borrow $3750@7.2% interest. If you have paid $405 in interest to date, you’ve had the loan for how long?
In some problems you may be presented with more than 1 percentage.
If so create the formula for each percentage given.
Example: a lender gives a loan of 57% of the value of the lot. The interest rate is10.2% and the first year’s interest is $1505.83.
What is the value of the lot?
Annual interest= rate x loan
To find value, use the loan to value ratio.
Loan= LTVr x value
A finance problem may involve calculating the principal portion of a loan payment.
There is no formula. To calculate principle payment directly.
Example: A monthly payment is $180.00. If the loan balance is $20,000 and the interest rates 9%, what portion of the payment applies to principle?
Annual Interest= 9% of the Loan Balance
Find the annual interest. Divide by 12 to get monthly interest.
Subtract the interest from the monthly payment.
To calculate the principle for next month, start over with the new loan balance.
Another variation of Amortized loans is to determine the total interest. To be paid on a loan.
For example: for $20,000 loan, payments are $180 a month. Interest is 9%. Term is 25 years.
To determine the total interest, just determine the total of all payments made and subtract the original loan amount.
Example: 180 x 12 month x 25 years=. Total interest and subtract it from the original loan amount.
To do by calculator
Enter the mortgage amount
Mortgage terms
Interest rate
Seller’s profits and Costs
Always ask what is the part (P). = Rate (Rate) xWhole (W)
While reading terms like,”profit”, commission, expenses, investment