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Maya is buying a house for $230,000 . she plans to make a 16% down payment. closing costs include $450 for 6 months of homeowners insurance, $800 for 6 months of property tax, $150 for the title fee, and $450 in transaction fees. maya also agreed to pay three points in exchange for a 0.75% reduction in interest rate. determine the amount of money maya needs to cover closing costs. round your answer to the nearest cent.

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Final answer:

Maya needs $7,646 to cover her total closing costs, which includes homeowners insurance, property tax, title fee, transaction fees, and points paid on the mortgage loan.

Step-by-step explanation:

To calculate the total amount of money Maya needs for closing costs on her home purchase, we need to add together all individual closing costs as well as any additional fees associated with the mortgage. Maya's closing costs include $450 for homeowners insurance, $800 for property tax, $150 for the title fee, and $450 in transaction fees. As for the points she agreed to pay, each 'point' is 1% of the loan amount. Since she is getting a loan after the down payment, we need to calculate 16% of the $230,000 purchase price which ends up being $36,800 as the down payment, leaving $193,200 to be financed. Therefore, three points is 3% of $193,200, equal to $5,796.

Adding all of these amounts together gives us the closing costs total:

  • Homeowners Insurance: $450
  • Property Tax: $800
  • Title Fee: $150
  • Transaction Fees: $450
  • Points Paid (3% of loan): $5,796

Therefore, the total closing costs for Maya are $450 + $800 + $150 + $450 + $5,796 = $7,646.

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