Question

You want to purchase a house in 10 years.
You estimate the cost will be $184,500.
You want to make a 20% down payment and pay closing costs,
which are 8.5%. How much are the down payment and closing costs?
How much do you need to save each month to reach your goal?

Answer 1

To calculate the down payment and closing costs for purchasing the house, you'll need to determine both amounts based on the estimated cost of the house, which is $184,500.

### Step 1: Calculate the Down Payment
The down payment is 20% of the price of the house.

\[
\text{Down Payment} = \text{Price of the House} \times 0.20
\]

\[
\text{Down Payment} = 184,500 \times 0.20 = 36,900
\]

### Step 2: Calculate Closing Costs
Closing costs are 8.5% of the price of the house.

\[
\text{Closing Costs} = \text{Price of the House} \times 0.085
\]

\[
\text{Closing Costs} = 184,500 \times 0.085 = 15,682.50
\]

### Step 3: Total Amount Needed
Now, let's calculate the total amount you need to save, which includes both the down payment and the closing costs.

\[
\text{Total Amount Needed} = \text{Down Payment} + \text{Closing Costs}
\]

\[
\text{Total Amount Needed} = 36,900 + 15,682.50 = 52,582.50
\]

### Step 4: Calculate Monthly Savings
To find out how much you need to save each month to reach your goal in 10 years (120 months), divide the total amount by the number of months.

\[
\text{Monthly Savings} = \frac{\text{Total Amount Needed}}{\text{Number of Months}}
\]

\[
\text{Monthly Savings} = \frac{52,582.50}{120} \approx 438.19
\]

### Summary
- **Down Payment:** $36,900
- **Closing Costs:** $15,682.50
- **Total Amount Needed:** $52,582.50
- **Monthly Savings:** approximately $438.19

Therefore, you need to save about **$438.19 each month** for the next 10 years to reach your goal.