A house costs $289,000. With a 5% down payment, 2 points due at closing, and the rest financed for 25 years at 6.0% fixed interest, what is the total cost of the house?
100% - 5% = 95% Down payment.
Po = 0.95 * $289,000 = $274,550.=Amount
of loan.
P = (Po*r*t)/(1-(1+r)^-t)
r = (6%/12)/100% = 0.005=Monthly % rate.
t = 25yrs. * 12mo./yr. = 300 months.
Plug the above values into the given Eq
and get: P = $530,678.85 = Total cost of
the house.
2 Points = 2% of Po.
Correction: 100%-5% = 95% borrowed.
Thank you
To find the total cost of the house, we need to calculate the down payment, the points due at closing, and the amount financed. Then, we can add these three amounts together.
1. Down Payment:
The down payment is 5% of the house cost, which is $289,000. To find the down payment amount, we calculate:
Down Payment = 5% of $289,000
Down Payment = 0.05 * $289,000
Down Payment = $14,450
2. Points Due at Closing:
Points are typically a percentage of the loan amount and are paid to the lender upfront. In this case, it is mentioned that 2 points are due at closing, but the loan amount is not specified. We'll assume the points are calculated based on the financed amount.
To calculate the points, we first need to determine the financed amount:
Financed Amount = House Cost - Down Payment
Financed Amount = $289,000 - $14,450
Financed Amount = $274,550
Now we can calculate the points:
Points Due = 2% of the Financed Amount
Points Due = 0.02 * $274,550
Points Due = $5,491
3. Amount Financed:
The amount financed is the remaining balance after the down payment:
Amount Financed = House Cost - Down Payment
Amount Financed = $289,000 - $14,450
Amount Financed = $274,550
4. Total Cost of the House:
The total cost of the house is the sum of the down payment, the points due at closing, and the amount financed:
Total Cost = Down Payment + Points Due + Amount Financed
Total Cost = $14,450 + $5,491 + $274,550
Total Cost = $294,491
Therefore, the total cost of the house is $294,491.