Jimmie the Gent is interested in property valued at $450,000. Jimmie will qualify for a $375,000 loan. However, Jimmie refuses to purchase if his LTV would fall under 80%. Is Jimmie likely to purchase the property?
A. Yes, the LTV is within Jimmie's range
B. No, unless Jimmie qualifies for another $2,000
C. Yes, so as long as Jimmie qualifies for another $10,000
D. No, unless Jimmie qualified for another $10,000
First, calculate the amount of the loan:
Downpayment = $75,000 x 0.20 = $15,000
Loan amount = $75,000 - $15,000 = $60,000
Next, calculate the cost of the points as follows. Remember that one point is considered to be 1% of the loan amount. So, 3.5 points would be 3.5% of the loan amount:
$60,000 x 0.035 = $2,100.
Finally, in order to know how much the buyer should bring to closing, we need to add the downpayment to the cost for the points:
Total needed: $15,000 + $2,100 = $17,100
An appraiser is estimating the value of a house. The sellers want to list for $370,000 since it has 4 bedrooms, 3 bathrooms, and a pool. A comparable property recently sold for $350,000 (with 3 bedrooms, 3 bathrooms, and a sun room). In the adjustment process, the appraiser estimates that an extra bedroom is worth $45,000, the pool is worth $4,000, and the sun room is worth $17,000. What is the adjusted sales price of the subject property?
D. None of the above