Final answer:
The portion of a home's purchase price paid in cash is called the down payment. It is separate from the mortgage loan and typically expressed as a percentage of the total price. This payment shows lenders your equity in the home, reducing their risk.
Explanation:
Understanding Home Purchase Payments
When buying a home, you often need to provide a portion of the purchase price in cash, separate from the amount you borrow through a mortgage loan. This cash payment is known as a down payment.
The down payment is typically expressed as a percentage of the home's total price and is a critical aspect of the home-buying process. It demonstrates to lenders that you have some equity in the property, reducing their risk.
Examples of Down Payments
- A $300,000 home with a 20% down payment means you'll pay $60,000 in cash, and the remaining $240,000 will be financed through a mortgage.
- If the down payment is only 3%, that would be $9,000 for a $300,000 home, which may be feasible for first-time homebuyers.
In summary, the correct answer to the question is (d) down payment, as it is the portion of the home’s purchase price paid in cash and not part of the mortgage loan.
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