Question

If Lewis's house increases in value by 3% each year over two decades, he could still lose money when he sells the house if _____.
Select the best answer from the choices provided.

a) interest rates on mortgages fell 3% over the same time
b) his repair and maintenance costs were more than 3% a year
c) homes in other areas of town lost more than 3% of their value
d) his down payment was significantly more than 3% of the house value

Answer 1

If Lewis's house increases in value by 3% each year over two decades, he could still lose money when he sells the house if the interest rates on mortgages fell 3% over the same time. This is because falling in the value if the interest rates will cause potential buyers to move to the areas where the mortgage rates are lower as opposed to sticking to the homes in which the rates are 3%

Answer 2

The correct answer is:

b) his repair and maintenance costs were more than 3% a year

Explanation:

Lewis's house increases in value by 3% each year. However, if he spends more than 3% of the value of his home each year in repairs and maintenance, when he sells the home, he will not be making money; he will in fact lose money, compared to what he's spent the last two decades.