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 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
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Finance 102: Personal FinanceChapter 7 / Lesson 4