83. A buyer wants to purchase a new home for $355,000 with a 30% down payment. The lender charges 2.25 points. How much money does the buyer need upfront for the purchase?
Answer: B
The buyer needs $104,833 upfront for the purchase.
To calculate the upfront cost for the buyer, we first determine the down payment and then add the points charged by the lender. The down payment is 30% of the home price, which totals $106,500, and the points amount to $2,250 based on the loan amount after the down payment.
A) $97,500
This option incorrectly reflects the total amount the buyer needs upfront. It does not account for the points charged by the lender, which are essential to include in the total upfront costs.
B) $104,833
This is the correct answer as it includes both the down payment of $106,500 and the lender's fees based on the loan amount after the down payment, resulting in a total of $104,833 needed upfront.
C) $99,694
This option miscalculates the total cost by underestimating either the down payment or the points. It does not accurately reflect the sum of the down payment and the costs associated with points.
D) $109,694
This choice overstates the amount required upfront. It likely miscalculates the down payment or the amount due in points, leading to a figure higher than necessary for the buyer's upfront costs.
Conclusion
Option B is definitively correct as it accurately combines the required down payment with the lender's points, resulting in the correct total of $104,833. All other options fail to account for either the complete down payment or the additional costs, leading to inaccurate totals for the buyer's upfront payment.