Erwin is purchasing a $190,000 home and is making a 20% down payment toward the cost. He is also buying 2 points in order to low
er his interest rate. The appraisal fee is $400, the title is $300, and the processing fee is $575. Including the down payment, what are his total closing costs?
Each point on a mortgage is 1% of the loan value. Since he is paying 20% down, the loan amount will be after this is paid. 20% of 190000 = 0.2(190000)=38000. The remaining loan will be 190000-38000=152000. 2 points will be 2% of this loan amount; 0.02(152000)=3040. This means his upfront costs are:
38000 down payment 3040 for points 400 appraisal fee 300 title 575 processing fee
