If your lending institution is willing to give you an 85% loan/mortgage on a house valued at...

Question:

If your lending institution is willing to give you an 85% loan/mortgage on a house valued at $150,000 and you already have given a $5,500 earnest money deposit, how much additional cash will you need for your downpayment?

Down Payment:

Down payment is the amount of money that a borrower pays on a purchase. The down payment is usually less than the full price of the purchase, and the difference is financed through borrowing from a financial institution.

Answer and Explanation:

The additional cash you need is the amount of down payment minus the earnest money deposited. Given a 150,000 value of the house and a 85% loan, the total down payment needed is 15% of the loan value, which is:

  • 15% * 150,000 = 22,500

The earnest deposit is 5,500, so the additional cash you need is:

  • 22,500 - 5,500 = 17,000

Learn more about this topic:

Loading...
Buying a House: Mortgage Types & Loan Length

from Finance 102: Personal Finance

Chapter 7 / Lesson 4
8.7K

Related to this Question

Explore our homework questions and answers library