Given That, A seller of the property listed at $200,000 excepted a 90% offer the home appraised at $185,000 and the buyers obtained a loan for 85% for 30 years at 5% interest
Thus, the first months interest is
$200,000 list price x 0.90 = $180,000 contract sales price.
Since lender always uses the less of the appraised value or the contract sales price, use $180,00 for the remainder of the calculations.
$180,000 contract sales price x 0.85 LTV = $153,000 loan.
$153,000 loan x 0.05 interest rate = $7,650 annual interest.
$7,650 ÷ 12 = $637.50 monthly interest payment for the first month.
