SECTION 10-3
Closing Cost
pp. 349-350
SECTION 10-3
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Section Objective
Second
level
Figure out:
Third level
• total closing costs
Fourth level
Fifth level
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SECTION 10-3
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KeytoWords
to Know
Second level
closing costs (p. 349)
Third level
The costs of transferring ownership of property,
Fourth level
such as credit checks and title searches, to the
Fifth
buyerlevel
by the seller.
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MBA, Section 10-3, Slide 3 of 13
SECTION 10-3
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Formula
Second level
Closing Costs = Sum of Bank Fees
Third level
Fourth level
Fifth level
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MBA, Section 10-3, Slide 4 of 13
SECTION 10-3
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• Second level
• Third level
The Hunt to Find a Home p. 349
• Fourth level
Why might the lender charge
• Fifth level
additional costs (over and above the
loan documents)?
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MBA, Section 10-3, Slide 5 of 13
SECTION 10-3
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Example
Second level
Trudy and Germane Hallett have been granted a
Third
level
mortgage
loan at an annual interest rate of 8
percent for
25 years by State Bank. The home has a
Fourth
level
selling price of $95,500. They need a 15 percent
Fifth
down level
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?
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MBA, Section 10-3, Slide 6 of 13
SECTION 10-3
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Example
Answer:
Step 1
Second level
Find the down payment.
Third level
$95,500 × 15% = $14,325
Fourth level
Fifth level
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MBA, Section 10-3, Slide 7 of 13
SECTION 10-3
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Example
Answer:
Step 2
Second level
Find the amount of the mortgage.
Third level
$95,500 – $14,325 = $81,175
Fourth level
Fifth level
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MBA, Section 10-3, Slide 8 of 13
SECTION 10-3
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Answer:
Step 3
Second
Find the level
closing costs.
Third level
Fourth level
Fifth level
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MBA, Section 10-3, Slide 9 of 13
SECTION 10-3
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Example
Answer:
Step 4
Second level
Find the actual amount financed.
Third level
Amount of Mortgage + Closing Costs
Fourth level
$81,175 + $3,194.96 = $84,369.96
Fifth level
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MBA, Section 10-3, Slide 10 of 13
SECTION 10-3
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Practice
Second level
Joseph and Marla Liebowitz have agreed to
Third
level
purchase
a house for $362,000. They made a down
paymentlevel
of 30 percent and are financing the
Fourth
remaining amount. The total closing costs are 3.25
Fifth
level
percent
of the mortgage loan.
What are the closing costs?
What is the total mortgage loan?
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MBA, Section 10-3, Slide 11 of 13
SECTION 10-3
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Practice
Answer
Second level
Closing costs: $8,235.50
Third level
Total mortgage loan: $261,635.50
Fourth level
Fifth level
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MBA, Section 10-3, Slide 12 of 13
END OF SECTION 10-3
Closing Costs