62. 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 upfront cost for the buyer, we first calculate the down payment and then add the points charged by the lender. The down payment is 30% of the purchase price, which amounts to $75,000, and the points add an additional $5,625 to this total, leading to the correct amount of $80,625.
A) $75,000
This option represents only the down payment, which is 30% of the purchase price. However, it does not take into account the additional cost of the points charged by the lender, which is necessary to determine the total upfront cost.
B) $80,625
This is the correct option. It includes both the down payment of $75,000 and the cost of the points, calculated as 2.25% of the loan amount ($250,000 - $75,000), which totals $5,625. Therefore, the total upfront amount required for the buyer is $80,625.
C) $76,688
This option is incorrect because it inaccurately combines the down payment and points. The calculation does not align with the correct method for determining the total upfront cost, as it does not accurately reflect the total amount required including the points.
D) $78,938
This option also fails to represent the correct total upfront cost. It does not properly account for the points charged by the lender, resulting in an amount that is lower than the actual requirement of $80,625.
Conclusion
The total upfront cost of $80,625 accurately reflects the sum of the down payment and the points charged by the lender. Options A, C, and D fail to consider the necessary additional costs, confirming that B is the only choice that encompasses the entirety of the upfront financial obligation for the buyer.