55. A buyer wants to purchase a home for $250,000 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: D
The buyer needs $78,938 up front to make the purchase.
To calculate the total amount the buyer needs up front, we first determine the down payment and then the points charged by the lender. The down payment for a $250,000 home at 30% is $75,000, and the lender's fees add an additional $3,938, leading to a total of $78,938.
A) 75,000
This option only represents the down payment of 30% of the home's price. While it is an essential part of the total upfront cost, it does not include the additional charges from the lender, which are necessary to determine the complete amount the buyer needs.
B) 80,625
This figure does not align with the calculations for either the down payment or the lender's points. It suggests an incorrect total that does not accurately reflect the costs involved in the home purchase, making it an invalid option.
C) 76,688
This figure miscalculates the points charged by the lender. While it considers the down payment, it fails to accurately account for the total cost after including the points, leading to an incorrect total.
D) 78,938
This option correctly combines the down payment of $75,000 with the lender's points calculated on the loan amount. The points amount to $3,938, which, when added to the down payment, results in the accurate total of $78,938.
Conclusion
The correct total amount of $78,938 includes both the necessary down payment and the points charged by the lender. Options A, B, and C fail to capture the complete financial requirement for the home purchase, whereas D accurately reflects the total upfront cost the buyer must provide.