Question

Geo wants to buy a new home. The sales price is 185000. He has prequalified for a loan at 5.4% interest over 30 years with a 5% down payment and closing cost of 3% of the sales price. Geo wants to roll the closing costs into the loan. How much is the lone amount ?

Answer 1

The sales price is $185,000.

The down payment is 5% of this, that is;

`(5)/(100)*185,000=\text{ \$9250}`

The closing cost is 3% of the sales price, that is;

`(3)/(100)*185,000=\text{ \$5550}`

The remaining cash left to pay is;

`5550+175750=\text{ \$181,300}`

This, would be on interest for 30 years;

so, the total loan amount is;

`181,300+(181,300*5.4*30)/(100)=181,300+293,700=\text{ \$475,000}`

Therefore, the loan amount is $475,000