Question

Broker Barry shows Mr. and Mrs. Dewey a condominium priced $135,000. He thinks he can get a loan of 80% of the value from Washington Savings & Loan Co. If the down payment is to be cash over loan, what will be the amount of the loan and the down payment?

a) Loan: $108,000, Down payment: $27,000
b) Loan: $27,000, Down payment: $108,000
c) Loan: $135,000, Down payment: $0
d) Loan: $0, Down payment: $135,000

Answer 1

Broker Barry can secure a loan for 80% of the condominium's price at $135,000, which equals a loan amount of $108,000. The down payment is the remaining cash required over the loan amount, totaling $27,000.

Step-by-step explanation:

According to the information provided, Broker Barry can get a loan for 80% of the condominium's value, which is priced at $135,000. To calculate the loan amount, we find 80% of $135,000:

Loan Amount = 80% of $135,000 = 0.80 × $135,000 = $108,000

Since the down payment is structured as cash over the loan amount, we subtract the loan from the total price to find the down payment:

Down Payment = Total Price - Loan Amount = $135,000 - $108,000 = $27,000.

Therefore, the correct answer is that the loan amount will be $108,000 and the down payment will be $27,000. The options provided offer the following choices, and

option a corresponds with the correct answer.