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Jeff purchases a $37,000 property, depositing $3,000 as earnest money. If Jeff obtains a 75% loan-to-value loan on the property, no additional items are prorated and there are no closing costs to Jeff, how much more cash will Jeff need at the settlement?

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EnigmaRiddle

Answer:

Jeff will need $6,250 more cash at the settlement

Step-by-step explanation:

First the 75% of the home value $37,000:

[tex]0.75\cdot37000=27750[/tex]

Therefore, the value not covered by the loan is the difference between the home value and its 75%:

[tex]37000-27750=9250[/tex]

Since Jeff has already done a deposit of $3,000 as earnest money, then the cash he will need at the settlement is the difference between the $9,250 and those $3,000 of the deposit:

[tex]9250-3000=6250[/tex]

Jeff will need $6,250 more cash at the settlement

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