Question 62

The buyer needs $60,900 up front to make the purchase.

To calculate the total upfront cost for the buyer, we first determine the down payment and then add the points charged by the lender. The down payment is 15% of $400,000, which equals $60,000. The lender charges 1.5 points on the loan amount, which is 1.5% of $340,000 (the purchase price minus the down payment), equating to $5,100. Therefore, the total upfront cost is $60,000 + $5,100 = $65,100.

A) $60,000

This option only accounts for the down payment and does not include any additional costs such as points. While $60,000 is correct for the down payment alone, it fails to consider the lender's fees, making it an incorrect choice for the total upfront amount required.

B) $66,000

This option is incorrect as it does not accurately reflect the calculations for the total upfront cost. It appears to be an arbitrary figure that does not consider the correct computations for the down payment and points, thus failing to represent the actual financial requirement.

C) $60,900

This amount is incorrect as it does not accurately calculate the total upfront costs. It seems to miscalculate the points associated with the loan. The proper calculation shows that the total upfront amount required is $65,100, thus making this option incorrect.

D) $65,100

This option represents the correct total upfront amount. It includes the down payment of $60,000 and the points of $5,100, which total $65,100. This correctly reflects the full financial obligation the buyer must meet to purchase the home.

Conclusion

Option D ($65,100) is the correct answer as it accurately combines both the down payment and the lender's points into the total upfront cost. Options A and B fail to include all necessary components of the transaction, while Option C inaccurately represents the total amount needed. Therefore, only Option D correctly satisfies the requirements of the question.