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12 August, 11:15

Wayne Goodspeed falls in love with and buys a house for a price that is 5% more than the appraised value. He secures a 10% down loan for $220,000 which represents the appraised value less the 10% down. What was the purchase price, and how much did Wayne have to come up with in cash?

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  1. 12 August, 11:39
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    The purchasing cost of the house = $ 256,666.67

    Cash to come up with = $ 36,666.67

    Explanation:

    Given dа ta:

    Purchasing cost of the house = 5% more than the appraised price.

    Loan amount = $ 220,000

    Now,

    it is given that 10% down loan for $220,000 represents the appraised value

    mathematically,

    after 10% down form the original, 100% - 10% = 90%

    since, the loan amount is 90% of the appraised amount, we have

    the appraised price * 90% = $220,000

    or

    the appraised price = $220,000 / 90% = $ 244,444.44

    therefore, the purchasing cost of the house = 5% more than the appraised price

    or

    the purchasing cost of the house = $ 244,444.44 + (5% of $ 244,444.44)

    or

    the purchasing cost of the house = $ 256,666.67

    also,

    Purchasing cost = Loan amount + cash

    or

    cash = Purchasing cost - Loan amount

    on substituting the values, we get

    cash = $ 256,666.67 - $220,000

    or

    Cash to come up with = $ 36,666.67
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