Question

A buyer agrees to purchase a house for $234,500. The buyer pays $2,000 as earnest money and obtains a new mortgage loan for $167,500. The purchase contract provides for a March 15 settlement. The buyer and the sellers prorate the previous year's real estate taxes of $4,880.96, which have been prepaid. The buyer has additional closing costs of $2,250, and the sellers have other closing costs of $1,850. How much cash must the buyer bring to the settlement?

Answer 1

The cash that the buyer must bring to the settlement after paying the earnest money is $72,130.96.

What is earnest money?

Earnest money is a good faith deposit that the buyer makes to assure the  seller about a buyer's good faith to buy a property. The earnest money enables the buyer to arrange for the purchase financing.

Data and Calculations:

House price =            $234,500

Earnest money paid =    (2,000)

Mortgage loan =          (167,500)

Real estate taxes =          4,880.96

Additional closing costs 2,250

Total cash on settlement = $72,130.96

Thus, the cash that the buyer must bring to the settlement is $72,130.96.

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