7. You are selling your house and you think it will sell for $275,000. You talk to a real estate agent who is willing to list your house for $279,900. Her fee is 7%. You currently owe $175,000 on your home.

(LO 7-3, LO 7-4)

a. How much will the real estate agent’s fee be if you get a full price offer?

b. How much will her fee be if you accept an offer for $275,000?

c. After you pay off your existing mortgage, how much money will you have to pay for taxes, other fees, and a down payment on your next house in

(a) and (b)?

d. If the buyer wants you to pay closing costs of

$3,500, how much money will you have for a down payment on your next house in

(a) and (b)?

e. You decide not to sell your house but to remodel and put on an addition. What is the equity in your house given a $275,000 appraised value?

f. The bank will let you borrow 90% of the appraised value of your house, which appraises at $275,000. What is the maximum home equity loan you can get?