Humber/Ontario Real Estate Course 3 Exam Practice

When submitting an offer for $252,000 with a $10,000 deposit and arranging a $172,000 new first mortgage, what is the balance due on closing?

1. $252,000

2. $242,000

3. $70,000

4. Cannot be determined based on the facts provided.

5. $90,000

6. $202,000

The correct answer is: $242,000

The balance due on closing can be calculated by considering the total purchase price, the deposit made, and the amount of the financed mortgage. In this scenario, the total purchase price is $252,000. The buyer has made a deposit of $10,000, which reduces the amount that is still needed to be paid at closing. The new mortgage is for $172,000, which is the amount the buyer will be financing through a bank or lending institution. To calculate the balance due on closing, the deposit and the mortgage amount are deducted from the total purchase price. Here is the breakdown: 1. Start with the total purchase price: $252,000. 2. Subtract the deposit amount: $252,000 - $10,000 = $242,000. 3. Subtract the mortgage amount: $242,000 - $172,000 = $70,000, which represents the additional funds the buyer would need to provide at closing. Thus, the balance due on closing is indeed calculated as $242,000, which takes into account both the initial deposit and the mortgage financing. This calculation shows how much cash the buyer needs to provide when finalizing the transaction, which is essential for understanding the financial commitments involved