19. A buyer wants to purchase a home for $325,000 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: B
The buyer needs $104,813 up front to make the purchase.
To determine the upfront amount required for the home purchase, the buyer must calculate the down payment and the points charged by the lender. With a purchase price of $325,000 and a 30% down payment, the total upfront cost amounts to $104,813.
A) $97,500
This option represents only the down payment amount, calculated as 30% of $325,000, which equals $97,500. However, it does not include the additional costs associated with the points charged by the lender, making it an incomplete answer.
B) $104,813
This option correctly accounts for both the 30% down payment of $97,500 and the lender's 2.25 points. The points amount to $7,313 (2.25% of $325,000), leading to a total upfront cost of $104,813, which is the correct answer.
C) $99,694
This option is incorrect as it does not accurately reflect the total upfront cost. While it may include a portion of the down payment or points, it fails to add the necessary amounts together correctly, indicating a misunderstanding of how to calculate the total upfront requirement.
D) $102,619
This option also does not represent the total upfront cost accurately. It appears to miscalculate either the down payment or the points, leading to an underestimation of the required funds for the purchase.
Conclusion
The correct answer of $104,813 is derived from the proper calculation of both the down payment and the lender's points, ensuring that all costs are considered. Options A, C, and D fail to incorporate the full scope of necessary expenses, while only option B provides a complete and accurate financial picture for the buyer’s upfront costs.