Frank and Mary are buying a home for $187,500. Their Good Faith Estimate indicates they will be paying $2200 in closing costs and prepaid expenses plus they want to do a permanent buy-down on their interest rate and will be paying 2 1/2 discount points. They are making a 20% down payment. How much total funds will Frank and Mary need to bring to closing $_______?
Okay, I figured out the down payment and the buy-down, but I'm not sure how to figure the Good Faith Estimate into it. HELP!
To calculate the total funds Frank and Mary will need to bring to closing, we need to consider the down payment, closing costs, prepaid expenses, and the buy-down.
1. Down Payment:
First, calculate the down payment based on the 20% of the home's price:
Down Payment = 20% of $187,500
Down Payment = 0.20 * $187,500
Down Payment = $37,500
2. Buy-Down:
To calculate the buy-down cost, we need to determine the loan amount. Since they are making a 20% down payment, the loan amount will be the remaining 80% of the home's price:
Loan Amount = 80% of $187,500
Loan Amount = 0.80 * $187,500
Loan Amount = $150,000
Next, calculate the buy-down cost based on the discount points:
Buy-Down Cost = Discount Points * Loan Amount
Buy-Down Cost = 2.5 * $150,000
Buy-Down Cost = $375,000
3. Closing Costs and Prepaid Expenses:
According to the Good Faith Estimate, Frank and Mary will be paying $2,200 in closing costs and prepaid expenses.
Now, let's calculate the total funds they need to bring to the closing:
Total Funds Needed = Down Payment + Buy-Down Cost + Closing Costs and Prepaid Expenses
Total Funds Needed = $37,500 + $375,000 + $2,200
Total Funds Needed = $414,700
Therefore, Frank and Mary will need to bring a total of $414,700 to the closing.