Question

Jenine wants to purchase a home for $110,000. Her bank is offering her 6% interest rate for a 30 year mortgage. Jenine has saved a 15% down payment. What is L?

Answer 1

L is the loan amount. We know that Jenine has saved a 15% downpayment, meaning she will pay 15% of house price at the time of borrowing.

After 15% is subtracted from the house price, the remaining amount is 85%, meaning Jenine will now only need to borrow 85% of the house price to purchase the house.

85% of the house price is

`(85)/(100)*110,000`
`=93,500.`

Hence, the loan amount is L = $93, 000.

Jenine paid 15% of the house price, right?

Now she has only 100% - 15% = 85% of the price left to pay.

Do you agree?