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 _____.

interest rates on mortgages fell 3% over the same time

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

homes in other areas of town lost more than 3% of their value

his down payment was significantly more than 3% of the house value

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 _____.

interest rates on mortgages fell 3% over the same time

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

homes in other areas of town lost more than 3% of their value

his down payment was significantly more than 3% of the house value

SmokeyBrown · Answer

Hey, I think I saw this exact question a few days ago, down to the names and everything!
Anyway, the relevant figure here is the cost of maintaining the home each year. If this exceeds the rate at which the house increases in value, of course Lewis is losing money.

The other options wouldn't directly affect Lewis's returns when he sells the house. In the first example, for instance, Lewis is actually paying less each year and saving money over time.

Jbaena1 · Answer

So lewis is losing money for sure. A,C, can't be the answer. so its between b or d.

Jbaena1 · Answer

its b right.

jhonyy9 · Answer

are you sure that b - so why not d . ?

Jbaena1 · Answer

Well as smokey explained the figure here is the cost maintaining the home each year.

SmokeyBrown · Answer

The reason that the initial down payment doesn't affect the amount of money Lewis makes from the house is that Lewis will end up paying for the value of the house in any case.
In fact, the larger the down payment, the less Lewis will have to pay in interest on the mortgage over time. So, a larger down payment could actually save money over time.