A buyer purchases a property for $290,000 with a loan amount of $261,000. Buyer closing costs are $5,500, and the earnest money deposit already paid is $4,000. How much additional cash must the buyer bring to closing?
Correct Answer
A) $30,500
Step 1: Down payment = $290,000 − $261,000 = $29,000. Step 2: Cash to close = $29,000 + $5,500 − $4,000 = $30,500.
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Related Topics & Key Terms
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Related Concepts
In real estate, property value can be estimated by dividing the Net Operating Income (NOI) by the Capitalization Rate (Cap Rate).
Proration is the process of dividing expenses or income between the buyer and seller at the closing of a real estate transaction. This ensures each party pays or receives only their fair share based on the period of ownership.
Proration calculations divide shared expenses such as property taxes, insurance, HOA dues, and rent between buyer and seller at closing based on the number of days each party owns the property.
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