A property sells for $320,000. The earnest money deposit was $6,400, and the buyer is obtaining an 80% loan. At closing, how much additional cash will the buyer need for the down payment (excluding closing costs)?
Correct Answer
A) $57,600
Correct: Down payment needed: $320,000 × 20% = $64,000. Less earnest money credit: $64,000 - $6,400 = $57,600 additional cash needed. Why not B: This is total down payment before earnest money credit. Why not C: This incorrectly adds earnest money instead of subtracting. Why not D: This is the loan amount, not down payment.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
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Previous Question
Broker Williams holds $12,000 in earnest money when both parties dispute its disposition after the buyer's loan is denied. The buyer claims the denial was due to property appraisal issues, while the seller claims it was due to buyer's credit problems. What should Williams do?
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Buyer Chen wants to increase her earnest money deposit from $2,000 to $5,000 to strengthen her offer in a multiple offer situation. How should this additional deposit be handled?