For a property priced at $150,000 with an 80% loan-to-value ratio and 3 points, how much does the buyer need to close the transaction?

To determine how much the buyer needs to close the transaction, we first need to calculate the mortgage amount based on the property price and the loan-to-value (LTV) ratio. The property is priced at $150,000, and with an 80% LTV ratio, the buyer can borrow 80% of the property's value.

Calculating the loan amount:

80% of $150,000 equals $120,000. This is the amount the buyer will finance through a mortgage.

Next, we'll identify the points the lender charges. Points are a form of prepaid interest, calculated as a percentage of the loan amount. In this case, the loan has 3 points. To find the total cost of the points, we calculate 3% of the loan amount of $120,000:

3% of $120,000 equals $3,600. This amount represents the cost of the points that the buyer must pay at closing.

To find out the total amount the buyer needs to bring to the transaction at closing, we must also consider the down payment. Since the buyer is borrowing 80% of the property value, the down payment will be the remaining 20% of the property price, which is:

20% of