1. The problem asks to calculate the closing costs on a home purchase using 3% of the purchase price. 2. The formula for closing costs is: $$\text{Closing Costs} = \text{Purchase Price} \times 0.03$$ 3. Important note: Closing costs are based on the purchase price, not the loan amount. 4. To calculate, multiply the purchase price by 0.03 (which is 3% expressed as a decimal). 5. For example, if the purchase price is $P$, then: $$\text{Closing Costs} = P \times 0.03$$ 6. This gives the amount you need to pay separately to finalize your mortgage. Closing costs: $P \times 0.03$ (replace $P$ with your home's purchase price to get the exact amount).