22. A buyer wants to purchase a home for $250000 with a 30% down payment. The lender charges 2.25 points. How much money does the buyer need up front to make the purchase?
Answer: B
The buyer needs $80,625 up front to make the purchase.
To determine the total amount the buyer needs to pay up front, we calculate the down payment and the points charged by the lender. The down payment is 30% of the purchase price, which amounts to $75,000. Additionally, 2.25 points on the loan amount (after the down payment) adds another $5,625, leading to a total of $80,625.
A) $75,000
This option only accounts for the down payment of 30% of the purchase price, which is correct at $75,000. However, it does not include the additional cost of 2.25 points, which must also be paid up front, making this option insufficient.
B) $80,625
This amount correctly includes both the 30% down payment of $75,000 and the points charged by the lender, which total $5,625. This comprehensive calculation makes this option the accurate total amount the buyer needs to provide up front.
C) $76,688
This figure incorrectly combines the down payment and points. It does not accurately reflect the costs involved, as it appears to miscalculate either the down payment or the points, ultimately failing to represent the total needed for the purchase.
D) $78,938
This option also does not represent the correct total. It seems to miscalculate the points or the down payment amount, leading to a total that does not align with the actual costs required to secure the home purchase.
Conclusion
Option B is the only choice that accurately reflects the total amount required for the buyer to make the home purchase, combining both the down payment and the lender's points. All other options fail to account for either the points or the correct down payment amount, resulting in underestimations of the total upfront costs.