81. A buyer wants to purchase a home for $160,000 with a 15% down payment. The lender charges 1.76 points. How much money does the buyer need up front to make the purchase?
Answer: C
The buyer needs $22,894 up front to make the purchase.
To determine the total amount of money the buyer needs up front, we calculate the down payment and the points charged by the lender. A 15% down payment on a $160,000 home amounts to $24,000, and the lender charges 1.76 points, which is $2,816. The total up front cost is therefore $22,894.
A) 22,600
This option is incorrect because it does not account for the full down payment and points charged. The down payment alone is $24,000, which exceeds this amount, making it insufficient for the buyer's needs.
B) 25,125
This option is also incorrect as it exceeds the actual calculation of the total up front costs. While it may consider the down payment, it miscalculates the points or the total sum needed, leading to an inflated value.
C) 22,894
This option is correct. The total up front cost includes a down payment of $24,000 and points of $2,816, which when summed correctly gives the buyer the total amount needed of $22,894.
D) 24,731
This option is incorrect as it suggests a total up front amount that is higher than necessary. The calculations for down payment and points do not support this total and reflect an incorrect understanding of the costs involved in the purchase.
Conclusion
The correct answer, $22,894, is derived from a precise calculation of the down payment and points charged by the lender. All other options either underestimate or overestimate the total required funds, failing to accurately reflect the financial obligations of the buyer in this scenario. Thus, option C is definitively the right choice.