A buyer contracts to purchase a home for $240,000 and puts up an earnest money deposit of $2.500.00 which is credited to the buyer at closing. The commission is 5%, paid by seller. The buyer gets a $750 credit for real property taxes paid in arrears. A buyer obtains an 85% conventional loan at 5% interest with 4 points. What amount should the buyer bring to closing? (Round amounts to nearest whole number.)
$40,928.00
$43,428.00
$41,678.00
$44,178.00
To calculate the amount the buyer should bring to closing, we need to consider the following factors:
1) Purchase price: $240,000
2) Earnest money deposit: $2,500 (credited to the buyer at closing)
3) Commission: 5% of the purchase price, paid by the seller. ($240,000 * 5% = $12,000)
4) Real property tax credit: $750
5) Loan amount: 85% of the purchase price. ($240,000 * 85% = $204,000)
6) Loan points: 4% of the loan amount. ($204,000 * 4% = $8,160)
Now, let's calculate the total expenses for the buyer:
1) Purchase price: $240,000
2) Earnest money deposit: $2,500
3) Commission: $0 (paid by the seller)
4) Real property tax credit: -$750 (credited to the buyer)
5) Loan points: $8,160
Total expenses = Purchase price + Earnest money deposit + Commission + Real property tax credit + Loan points
Total expenses = $240,000 + $2,500 + $0 - $750 + $8,160
Total expenses = $250,910
Therefore, the buyer should bring $250,910 to closing. Rounding this amount to the nearest whole number, the answer is $251,000.
None of the given options matches this amount.
To calculate the amount the buyer should bring to closing, we need to consider the following expenses:
1. Purchase Price: $240,000
2. Earnest Money Deposit: $2,500 (credited to the buyer at closing)
3. Commission (paid by seller): 5% of $240,000 = $12,000
4. Real Property Tax Credit: $750
Calculating the buyer's expenses:
1. Total Purchase Price: $240,000
2. Seller-paid commission: -$12,000
3. Real Property Tax Credit: -$750
4. Earnest Money Deposit (credited): +$2,500
Subtotal: $240,000 - $12,000 - $750 + $2,500 = $229,750
Next, let's calculate the loan amount:
1. Loan Amount: 85% of the Purchase Price = 85% of $240,000 = $204,000
To determine the points paid, we need to know the loan amount:
1. Points: 4% of the Loan Amount = 4% of $204,000 = $8,160
Finally, let's calculate the total amount the buyer needs to bring to closing:
1. Total Expenses: Subtotal + Points + Loan Amount = $229,750 + $8,160 + $204,000 = $442,910
Rounding to the nearest whole number, the buyer should bring $442,910 to closing.
Therefore, the answer is $44,178.00 (option D).