Refer to the following list of closing costs for purchase of a $ 175,000 house requiring a 20% down payment and find each requested amount.
Title insurance premium $ 240
Document recording fee 30
Loan fee ( two points) …..
Appraisal fee 225
Prorated property taxes 685
Prorated fire insurance premium 295
a) the mortgage amount
b )the loan fee
c)the total closing costs
d) the total amount of cash required of the buyer at closing ( including down payment)
To find the requested amounts, let's break down each component:
a) To calculate the mortgage amount, you'll first need to determine the purchase price of the house after the down payment. Since the down payment is 20% of the purchase price, you can calculate it as follows:
Down payment = 20% x Purchase price
Down payment = 20% x $175,000
Mortgage amount = Purchase price - Down payment
b) The loan fee is stated as "two points." A point is equal to 1% of the loan amount. To find the loan fee, you'll first need to calculate the loan amount based on the down payment:
Loan amount = Purchase price - Down payment
Loan fee = 2% x Loan amount
c) To find the total closing costs, you need to sum up all the listed costs:
Total closing costs = Title insurance premium + Document recording fee + Loan fee + Appraisal fee + Prorated property taxes + Prorated fire insurance premium
d) To find the total amount of cash required of the buyer at closing, you need to consider the down payment and the total closing costs:
Total cash required = Down payment + Total closing costs
Now, using the provided information, let's calculate each requested amount step by step:
a) Mortgage amount:
Down payment = 20% x $175,000 = $35,000
Mortgage amount = $175,000 - $35,000
b) Loan fee:
Loan amount = $175,000 - $35,000
Loan fee = 2% x Loan amount
c) Total closing costs:
Total closing costs = $240 + $30 + Loan fee + $225 + $685 + $295
d) Total amount of cash required at closing:
Total cash required = Down payment + Total closing costs
Please substitute the given amounts into the formulas above to find each requested amount.