1. Closing Costs & The Monthly Payment
Lesson 6.5

2. Closing Costs
6.5a

3. Closing costs are any extra fees charged at the time the house is transferred.
Sum of Bank fees

4. Step 1) Down Payment Step 3) Closing Costs D.P. = 95,500(0.15)
Trudy and Jeremy Hallett have been granted a mortgage loan for $95,500. There is an annual interest rate of 8%. The loan is for a period of 25 years. They need a 15% down payment. What are the total closing costs? What is the actual amount financed with the mortgage?
Step 1) Down Payment
Step 3) Closing Costs
Closing Costs
Credit Report
$65.00
Loan Origination
2% of Mortgage
Abstract of Title
$120.00
Attorney Fee
$250.00
Documentation Stamp
0.3% of Mortgage
Processing Fee
1.10% of Mortgage
Total
D.P. = 95,500(0.15)
D.P. = $14,325
Step 2) Mortgage Amt.
M.A.= 95,500 – 14,325
M.A. = $81,175
$3,194.96
Step 4) Amount Financed
A.F. = 81, ,194.96
A.F. = $84,369.96

5. You were granted a mortgage loan for $85,000
You were granted a mortgage loan for $85,000. There is an annual interest rate of 8%. The loan is for a period of 30 years. You need a 15% down payment.
Find the total costs.
Find the amount financed with the mortgage.
Step 1) Down Payment
Step 3) Closing Costs
D.P. = 85,000(0.15)
C.C.= (.02) +
(.003) +
72250(.011)
D.P. = $12,750
Step 2) Mortgage Amt. =
M.A.= 85,000 – 12,750
M.A. = $72,250
C.C. = $2,891.50
Step 4) Amount Financed
A.F. = 72, ,891.50
A.F. = $75,141.50

6. Monthly Payment
Section 10.4

7. I=PRT Monthly Payment Pay to Principal = - Interest New Principal =
Previous
Principal
- Pay to Principal

8. Rod and Carey Finn obtained a 30-year, $80,000
Rod and Carey Finn obtained a 30-year, $80, mortgage loan from State Bank and Trust. The interest rate is 8 percent. Their monthly payment is $ For the first payment what is the interest? What is the payment to principal? What is the new principal.
Step 1) Interest
I = 80,000(0.08)(1/12)
I = $533.33
Step 2) Payment to Principal
P. to P. = –
P. to P. = $53.87
Step 3) New Principal
New P. = 80,000 – 53.87
New P. = $79,946.13

9. Suppose after the 327th payment of a $80, year loan, you have a principal balance of $17, and are making equal monthly payments of $ Find the new principal after payment 328.
Step 1) Interest
I = 17,117.15(0.08)(1/12)
I = $114.11
Step 2) Payment to Principal
P. to P. = –
P. to P. = $473.09
Step 3) New Principal
New P. = 17, –
New P. = $79,946.13

10. 6.5: Closing Costs & Monthly Payment
Questions
Summarize your notes
Homework
Worksheet