43. A buyer wants to purchase a home for $200,000 with a 20% down payment. The lender charges 2 points. How much money does the buyer need up front to make the purchase?
Answer: B
The buyer needs $44,000 up front to make the purchase.
To calculate the total amount the buyer needs up front, we consider the down payment and the points charged by the lender. The down payment of 20% on a $200,000 home is $40,000, and the additional cost from the 2 points amounts to $4,000, resulting in a total of $44,000.
A) $40,000
This option only accounts for the 20% down payment of the home, which amounts to $40,000. However, it does not include the additional costs associated with the lender's points, which are critical for determining the total upfront amount needed.
B) $44,000
This option correctly includes both the down payment of $40,000 and the cost of the 2 points, which is calculated as 2% of the home's price ($200,000), equating to $4,000. Therefore, the total amount required upfront is $40,000 + $4,000 = $44,000.
C) $40,800
This figure incorrectly combines the down payment with an inaccurate calculation for the points. The points should be $4,000, not $800, making this option incorrect.
D) $43,200
This option represents a miscalculation of the points or an incorrect addition to the down payment. The correct calculation for the total upfront costs should be $44,000, making this option flawed.
Conclusion
The correct answer is $44,000, as it encompasses both the required 20% down payment and the cost of the lender's points. All other options either disregard the points or miscalculate the amounts, underscoring the importance of considering both components in the total upfront cost for the home purchase.