Question

Richie Rich has been approved for a 90% loan. Richie is under contract to purchase a home for $400,000 and put $5,000 earnest money down with the contract. If Richie's lender is charging 1% origination, 1% discount, and the title company fees total $1,350, how much does Richie need to bring to closing

Answer 1

Richie Rich

The total amount that Richie needs to bring to closing the transaction is

= $43,550.

Step-by-step explanation:

a) Data and Calculations:

Cost of home purchase contract = $400,000

90% loan to be given Richie = $360,000 ($400,000 * 90%)

Therefore, 10% will be provided by Richie = $40,000 ($400,000 * 10%)

Earnest money down payment = $5,000

Balance required from Richie = $35,000 +

Additional 1% of $360,000 for origination fee = $3,600 ($360,000 * 1%)

Additional 1 of $360,000 for discount = $3,600 ($360,000 * 1%)

Title charge = $1,350

Total amount that Richie needs to bring to closing the transaction = $43,550 ($35,000 + $3,600 + $3,600 + $1,350).