Question

A lender will make an 80% loan-to-value loan on a property that is appraised for $72,250 and sells for $73,500. If the buyer has saved $14,450 for a down payment, how much more (if any) will he need in order to make the down payment required under the terms of this loan?

Answer 1

$1250

Explanation:

The loan can be made for up to ...

0.80 × $72,250 = $57,800

For a selling price of $73,500, the amount not funded by the loan will be ...

$73,500 -57,800 = $15,700

This is more than the buyer has saved by ...

$15,700 -14,450 = $1,250

The buyer will need $1250 in additional funds.