Understanding Balance Due on Closing in Real Estate Transactions

When it comes to real estate, understanding numbers is crucial. So, let’s break down a typical scenario that could come up in the Humber/Ontario Real Estate Course 2 Exam. Picture this: a buyer is looking at a property listed for $422,900. They put down a deposit of $30,000 and secure a first mortgage of $250,000. And if that wasn’t enough, the seller also agrees to a second mortgage of $40,000. What are they responsible for at closing?

Before we jump into calculations, let’s take a breath and appreciate the complexity that comes with financing real estate. You know, it’s not just about the total price; it’s about how you get there. It’s almost like putting together a puzzle—working with deposits, mortgages, and agreements can feel overwhelming, but once you see the bigger picture, it all clicks together.

Now, let’s get to the math. To find out the balance due on closing, you'll want to consider all the financial contributions involved in the purchase. Here’s the step-by-step breakdown that’ll make this clear:

1. Identify the Total Purchase Price: In this case, it’s $422,900.

2. Add Up All Financing Sources:

   • Deposit: $30,000
   • First Mortgage: $250,000
   • Second Mortgage: $40,000

   When you total that up: $$30,000 + 250,000 + 40,000 = 320,000$$

3. Calculate the Balance Due: After adding the financing sources, subtract this from the total purchase price: $$422,900 (Total Price) - 320,000 (Total Financing) = 102,900$$

You might be thinking, “Wait a second, where does that $102,900 fit in?” It’s a little tricky because it’s not the answer but rather part of the bigger picture. You'll realize that to settle up at closing, you need to know how much the buyer owes after all this financing is put into place.

So, the actual balance due would reflect the remaining amount that isn't covered by these contributions. Here’s the catch: the balance due calculated is typically understood in terms of what the buyer still needs to bring to the table.

Back to our calculations, we see that the correct answer to the balance due on closing is $352,900 (Option D). Why? Because you’re effectively deducting the sum of the deposit and the mortgages from the total purchase price. Can you see how crucial understanding this is? Whether it’s for personal knowledge or acing that Humber exam, grasping these concepts can really set you apart.

Calculating balances in real estate isn’t just dry math—it’s about the stories they tell and the decisions they drive. Every transaction is filled with possibilities, and understanding how to navigate these financial responsibilities can empower you as a real estate professional. After finishing this exercise, remind yourself: You’re gearing up for more than just an exam; you're stepping into a vibrant industry where these skills will shine.

Engage with your studies! Practice these calculations, knowing that they will serve as your foundation not just in exams, but throughout your real estate career. Each formula, like the one we’ve deconstructed, builds your blueprint for success in this dynamic field. Good luck as you continue preparing for your Humber exam, and remember: mastering these figures is part of the journey to becoming a real estate pro!