Final answer:
To compute the amount to be financed after a $1,500 down payment, subtract the down payment from the home's purchase price. For a $100,000 home, if only a minimum down payment is made, one would need to finance $98,000, assuming a $1,500 down payment covers more than the required minimum percentage.
Step-by-step explanation:
To compute the amount to be financed, you first need to know the total purchase price of the item you're buying, such as a house. Let's assume you're buying a house at a total purchase price of $100,000.
According to a general rule of thumb, it's a good idea to put down twenty-percent as a down payment, which would be $20,000 for a $100,000 house. However, not everyone can afford this and might opt for a lower down payment.
If you have saved $1,500 for a down payment, and you're looking at a potential lower down payment option, say 3.5%, you would need to finance the remainder of the purchase price minus your down payment. For a $100,000 home, 3.5% would be $3,500. Since you've saved $1,500, you subtract this from the $3,500 which equals $2,000. Therefore, you would still need to finance the purchase price minus $2,000. In this case, the amount to be financed would be $100,000 - $2,000 = $98,000.
Keep in mind that choosing a lower down payment can also mean having to pay for mortgage insurance, which protects the lender if you default on the loan. This will increase the total mortgage amount you pay over time. Furthermore, just making the minimum payments on a loan can result in paying a significant amount in interest over the years, sometimes more than twofold the initial loan amount.