Tina and Tony have successfully negotiated a house price and have been approved for a loan at an attractive rate. They are going to pay 20% down on the house and borrow the rest. However, they were shocked to see the good faith estimate of closing costs provided to them by the lender. The house value is $250,000 and the closing cost estimate, excluding escrows, represented approximately 3% of the loan amount. If the escrow for taxes and insurance are $3,800, how much money do Tina and Tony have to come up with at the time of closing (excluding the down payment)?

Question

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The closing costs, excluding escrows, are approximately 3% of the loan amount. The loan amount is 80% of the house value, which is $200,000. Therefore, the closing costs, excluding escrows, are approximately $6,000. Adding the escrow for taxes and insurance of $3,800, the total closing costs are $9,800.

Tina and Tony Have Successfully Negotiated a House Price and Have