 SECTION 10-3 Closing Cost pp. 349-350.

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SECTION 10-3 Closing Cost pp

Section Objective Figure out: total closing costs

Key Words to Know closing costs (p. 349)
The costs of transferring ownership of property, such as credit checks and title searches, to the buyer by the seller.

Formula Closing Costs = Sum of Bank Fees

The Hunt to Find a Home p. 349 Why might the lender charge additional costs (over and above the loan documents)?

Example 1 Trudy 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?

Example 1 Answer: Step 1 Find the down payment.
\$95,500 × 15% = \$14,325

Example 1 Answer: Step 2 Find the amount of the mortgage.
\$95,500 – \$14,325 = \$81,175

Example 1 Answer: Step 3 Find the closing costs.

Example 1 Answer: Step 4 Find the actual amount financed.
Amount of Mortgage + Closing Costs \$81,175 + \$3, = \$84,369.96

Practice 1 Joseph 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?

Practice 1 Answer Closing costs: \$8,235.50
Total mortgage loan: \$261,635.50

END OF SECTION 10-3 Closing Costs