Question

Wayne Goodspeed falls in love with and buys a house for a price that is 5% more than the appraised value. He secures a 10% down loan for $220,000 which represents the appraised value less the 10% down. What was the purchase price, and how much did Wayne have to come up with in cash?

Answer 1

The purchasing cost of the house = $ 256,666.67

Cash to come up with = $ 36,666.67

Step-by-step explanation:

Given data:

Purchasing cost of the house = 5% more than the appraised price.

Loan amount = $ 220,000

Now,

it is given that 10% down loan for $220,000 represents the appraised value

mathematically,

after 10% down form the original, 100% - 10% = 90%

since, the loan amount is 90% of the appraised amount, we have

the appraised price × 90% = $220,000

or

the appraised price = $220,000 / 90% = $ 244,444.44

therefore, the purchasing cost of the house = 5% more than the appraised price

or

the purchasing cost of the house = $ 244,444.44 + ( 5% of $ 244,444.44)

or

the purchasing cost of the house = $ 256,666.67

also,

Purchasing cost = Loan amount + cash

or

cash = Purchasing cost - Loan amount

on substituting the values, we get

cash = $ 256,666.67 - $220,000

or

Cash to come up with = $ 36,666.67