Question

A buyer agrees to purchase a house for $234,500. The buyer pays $2,000 as earnest money and obtains a new mortgage loan for $167,500. The purchase contract provides for a March 15 closing. The buyer and the sellers prorate the previous year's real estate taxes of $4,880. 96, which have been prepaid. The buyer has additional closing costs of $2,250, and the sellers have other closing costs of $1,850. How much cash must the buyer bring to the closing

Answer 1

The total cost of the house is $234,500, and the buyer obtained a mortgage loan for $167,500. Therefore, the buyer's down payment will be:

Down payment = Total cost - Mortgage loan
Down payment = $234,500 - $167,500
Down payment = $67,000

The buyer has already paid $2,000 as earnest money, so the remaining cash required at closing will be:

Cash required = Down payment + Closing costs - Earnest money - Prorated taxes
Cash required = $67,000 + $2,250 + $1,850 - $2,000 - $4,880.96
Cash required = $63,219.04

Therefore, the buyer must bring $63,219.04 in cash to the closing.