Buyer Dan wants to purchase 1695 Argon St. for $230,000 with 15% down and the interest rate is 8%. The lender could reduce the interest rate to 7 ¾% if he paid 3 discount points. How much will Dan have to bring to closing?

To determine how much Dan will need to bring to closing, we can break down the components involved, including the down payment, any points paid for reducing the interest rate, and closing costs.

First, calculating the down payment: Dan is purchasing a home for $230,000 with a 15% down payment. The down payment amount is therefore calculated as follows:

[

Down\ Payment = Purchase\ Price \times Down\ Payment\ Percentage \

= 230,000 \times 0.15 = 34,500

]

Next, we need to consider the cost of the discount points. Discount points are a way for borrowers to pay upfront to reduce the interest rate on their mortgage loan. Each point typically costs 1% of the loan amount.

1. Calculate the loan amount after the down payment:

[

Loan\ Amount = Purchase\ Price - Down\ Payment \

= 230,000 - 34,500 = 195,500

]

2. Now calculate the cost of the discount points to reduce the interest from 8% to 7.75%. If Dan pays 3 discount points:

[

Cost\ of\ Points = Loan\ Amount \times Number\ of\ Points \