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A) How much would you have to put down on a house costing $100,000 if the house had an appraised...

Question:

A) How much would you have to put down on a house costing {eq}\$100,000 {/eq} if the house had an appraised value of {eq}\$105,000 {/eq} and the lender required an {eq}80 \% {/eq} loan-to-value ratio?

B) How much might a homebuyer expect to pay in closing costs on a {eq}\$120,000 {/eq} house with a {eq}10 \% {/eq} down payment?

Home Mortgage Loan:

This question relates to a home mortgage loan (home mortgage). A home mortgage is a loan provided by a bank, mortgage firm, or other financier to an individual for the purchase of a home. As part of the agreement, the new homeowner transfers title to the asset to the lender. Upon repayment of the loan, the lender will transfer the title back to the homeowner.

Answer and Explanation:

Part A)

A home costing $100,000, appraised at $105,000, with a lone-to-value requirement of 80% would require the following down payment:

Down Payment = $100,000 - (.080 * $105,000) = $16,000

Part B)

Closing costs can vary, depending on the market and the particular transaction. Nonetheless, in general, closing costs for the purchaser of a home approximate 3.0% of the sales price. So, the purchase of a $120,000 home would entail closing costs totaling $3,600 ($120,000 * .03).


Learn more about this topic:

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Buying a House: Mortgage Types & Loan Length

from Finance 102: Personal Finance

Chapter 7 / Lesson 4
8.7K

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