In a real estate transaction where a property sold for $115,000 and $15,000 was provided as earnest money, what additional cost does the buyer incur when charged a loan fee of 2%?

To determine the additional cost incurred by the buyer when a loan fee of 2% is charged, it's important to understand how loan fees work. A loan fee is typically a percentage of the loan amount that a lender charges to process the loan.

In this case, the property sold for $115,000. To find the dollar amount of the loan fee, you need to calculate 2% of the loan amount. Assuming the buyer finances the entire purchase price (the loan amount) and does not include the earnest money in the calculation, the loan fee would be calculated as follows:

1. Calculate 2% of the full property price:

• 2% of $115,000 = 0.02 x $115,000 = $2,300.

However, since the earnest money may have a bearing on the final loan amount, it's reasonable to assume that the buyer is likely to finance the remaining balance after the earnest money is paid. The earnest money serves as a deposit towards the purchase and may reduce the total loan amount funded.

If the buyer pays $15,000 as earnest money, the loan amount they may actually apply for would be:

• $115,000 - $15,000 = $100,000