Question 15

The buyer needs $63,600 up front to make the purchase.

To determine the total upfront cost for the buyer, we must first calculate the down payment and the points charged by the lender. The down payment for a $300,000 home at 20% is $60,000. The lender's points, calculated as 1.5% of the loan amount ($240,000 after the down payment), adds an additional $3,600, bringing the total upfront cost to $63,600.

A) $60,000

This option represents only the down payment, which is 20% of the purchase price. However, it does not account for the lender's charges. Therefore, it is incorrect because it does not include the points that need to be paid upfront.

B) $64,600

This option incorrectly adds the down payment and an incorrect calculation of the points. The points should be calculated on the loan amount, which is $240,000, resulting in a charge of $3,600, not the figures that would lead to $64,600. Thus, this option is incorrect.

C) $60,900

This amount mistakenly combines the down payment with an incorrect points calculation. The down payment is accurately represented at $60,000, but the additional costs do not add up correctly to make up this total. Therefore, this option is also incorrect.

D) $63,600

This option accurately reflects the total amount needed upfront. It combines the down payment of $60,000 with the 1.5 points charged on the loan amount of $240,000, which totals $3,600. This makes the total upfront payment $63,600, confirming this as the correct answer.

Conclusion

The correct answer is $63,600, which accurately includes both the down payment and the lender's points. The other options fail to account for the complete financial responsibility required from the buyer, either by overlooking the lender's charges or by miscalculating the total required upfront payment.