PSI New Jersey Real Estate State Practice Exam

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Prepare for the PSI New Jersey Real Estate State Exam. Study with flashcards and multiple choice questions, each with detailed hints and explanations. Get ready to succeed on your exam!

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If a home is purchased for $275,000 with an 80% loan, what is the buyer's down payment after the seller pays $5,000 of the closing costs?

$55,000
$50,000
$45,000
$40,000

The correct answer is: $55,000

To determine the buyer's down payment, first calculate the loan amount. With an 80% loan on a $275,000 home, the loan amount is 80% of $275,000, which is $220,000. Next, calculate the full down payment before considering the seller's contribution to closing costs. The total down payment required when purchasing the home is the purchase price minus the loan amount. So, the down payment before any contributions is: $275,000 (purchase price) - $220,000 (loan amount) = $55,000. The seller's contribution of $5,000 towards closing costs does not affect the calculation of the down payment itself, as closing costs are separate from the down payment. Therefore, the down payment remains at $55,000. This means the correct answer accurately reflects the necessary down payment based on the loan percentage of the home's purchase price, without the closing costs playing any role in adjusting the down payment amount.