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?
To find the total cost of the house, we need to calculate the down payment, points, and the total amount of the loan, and then sum them up.
1. Down Payment:
The down payment is given as 5% of the house cost. To find the down payment amount, we multiply the house cost by 5% (or 0.05).
Down Payment = $289,000 * 0.05 = $14,450
2. Points:
The points are a percentage of the loan amount that is due at closing. In this case, 2 points are due.
To calculate the points, we first need to find out the loan amount. Since the down payment is subtracted from the house cost, the loan amount is the difference between the house cost and the down payment.
Loan Amount = House Cost - Down Payment
Loan Amount = $289,000 - $14,450 = $274,550
Points = 2% of Loan Amount
Points = $274,550 * 0.02 = $5,491
3. Loan Amount:
To calculate the loan amount, we subtract the down payment from the house cost.
Loan Amount = House Cost - Down Payment
Loan Amount = $289,000 - $14,450 = $274,550
4. Total Cost:
To find the total cost of the house, we need to add up the down payment, points, and the loan amount.
Total Cost = House Cost + Points + Loan Amount
Total Cost = $289,000 + $5,491 + $274,550
Total Cost = $568,041
Therefore, the total cost of the house is $568,041.