Question

The Garcias are buying a house for $300,000. They put down $30,000 on the

day of the purchase and got a 30-year mortgage at 3.5 percent to pay off the

remaining $270,000. In this scenario, the $30,000 is the

• A. loan term.

•

B. down payment

•

C. interest rate

•

D. principal

Answer 1

The $30,000 the Garcias put down for the purchase of their $300,000 house is known as the down payment. It is the initial payment made when securing a mortgage for the remaining balance, which in this case is $270,000.

Step-by-step explanation:

In the scenario provided, the Garcias are purchasing a house for $300,000 and are putting down $30,000 on the day of the purchase. This amount, $30,000, is known as the down payment. It's the initial upfront portion of the total purchase price paid by the buyer to the seller, with the intention of securing the mortgage loan from a bank or a lender for the remaining amount, which in this case is $270,000. The loan term is the duration of time over which the loan is to be repaid, which is 30 years here. The interest rate is the percentage of the loan amount charged by the lender for use of the funds, and here it is 3.5 percent. Lastly, the principal refers to the initial sum of money borrowed, or still owed on a loan, exclusive of interest. In this case, the principal would be the remaining $270,000 that the Garcias will finance through the mortgage.

Answer 2

The $30,000 paid by the Garcias at the time of their house purchase is known as the down payment. It is a portion of the total cost of the house that is paid upfront, with the rest being financed through a mortgage loan.

Step-by-step explanation:

The Garcias are buying a house for $300,000 and they put down $30,000 on the day of the purchase. This $30,000 is considered a down payment. A down payment is the amount of money a home buyer pays upfront to the seller, which is part of the total purchase price. The remaining amount of the home cost is typically financed through a mortgage, where a loan is taken out and paid back over time, in this case, over a 30-year term with a 3.5 percent interest rate. The mortgage helps spread the cost of buying a house over many years, making homeownership more accessible for many people. It is important to note that not making the down payment large enough can result in the need for mortgage insurance, which protects the lender in case the borrower defaults on the loan payments.