6.4 Purchasing a Home Bell Ringer

Front

What is a down payment in home purchasing?

Back

A down payment is the initial upfront payment made when purchasing a home, typically expressed as a percentage of the purchase price.

Front

How do you calculate closing costs?

Back

Closing costs are typically calculated as a percentage of the home's purchase price, usually ranging from 2% to 6%.

Front

What is prepaid interest in the context of home buying?

Back

Prepaid interest is the interest that is paid in advance for the period between the closing date and the end of the month.

Front

How do you calculate the amount borrowed after a down payment?

Back

Amount Borrowed = Purchase Price - Down Payment.

Front

What is the formula to calculate prepaid interest?

Back

Prepaid Interest = (Loan Amount x Interest Rate x Number of Days) / 360.

Front

If a home costs $300,000 and the down payment is 12%, how much is the down payment?

Back

Down Payment = $300,000 x 0.12 = $36,000.

Front

What is the range of closing costs for a $300,000 home with 2% to 6% closing costs?

Back

Closing Costs Range = $300,000 x 0.02 to $300,000 x 0.06 = $6,000 to $18,000.

Front

If Jason is closing on a $430,000 home with a 13% down payment, how much is his down payment?

Back

Down Payment = $430,000 x 0.13 = $55,900.

Front

What is the significance of the interest rate in a mortgage?

Back

The interest rate determines the cost of borrowing money for the mortgage and affects monthly payments.

Front

How do you determine the total amount due at closing?

Back

Total Amount Due at Closing = Down Payment + Closing Costs + Prepaid Interest.