5 The Hunt to Find a Home p. 349Why might the lender charge additional costs (over and above the loan documents)?
6 Example 1Trudy and Germane Hallett have been granted a mortgage loan at an annual interest rate of 8 percent for 25 years by State Bank. The home has a selling price of $95,500. They need a 15 percent down payment. State Bank will allow them to finance the closing costs as part of the mortgage.What are the total closing costs?What is actual amount financed with the mortgage?
7 Example 1 Answer: Step 1 Find the down payment. $95,500 × 15% = $14,325
8 Example 1 Answer: Step 2 Find the amount of the mortgage. $95,500 – $14,325 = $81,175
10 Example 1 Answer: Step 4 Find the actual amount financed. Amount of Mortgage + Closing Costs$81,175 + $3, = $84,369.96
11 Practice 1Joseph and Marla Liebowitz have agreed to purchase a house for $362,000. They made a down payment of 30 percent and are financing the remaining amount. The total closing costs are 3.25 percent of the mortgage loan.What are the closing costs?What is the total mortgage loan?
12 Practice 1 Answer Closing costs: $8,235.50 Total mortgage loan: $261,635.50