64. A home is purchased with an 80% LTV loan. The buyer is making a $15,000 down payment, paying 1 point, and typical year-end loan and other closing costs. What is the sale price of the home?
Answer: A
The sale price of the home is $75,000.
To determine the sale price of the home, we can use the loan-to-value (LTV) ratio along with the down payment. With an 80% LTV, the buyer is financing 80% of the home's value, which means the down payment of $15,000 represents the remaining 20%.
A) $75,000
This option is correct because if the home is valued at $75,000, then 20% of the sale price is $15,000 (0.20 x $75,000 = $15,000). This matches the down payment made by the buyer, confirming the sale price.
B) $93,750
This option is incorrect. If the home were valued at $93,750, then 20% of this amount would be $18,750, which exceeds the $15,000 down payment made by the buyer. Therefore, this option does not align with the given down payment.
C) $100,000
This option is also incorrect. A home sale price of $100,000 would require a down payment of $20,000 (0.20 x $100,000 = $20,000), which is higher than the $15,000 down payment provided. Thus, it does not satisfy the conditions of the question.
D) $118,750
This option is incorrect as well. If the home were priced at $118,750, the down payment would be $23,750 (0.20 x $118,750 = $23,750), again exceeding the $15,000 down payment made. This option does not meet the criteria set by the buyer's payment.
Conclusion
The correct answer is $75,000, as it accurately reflects the buyer's down payment of $15,000 being 20% of the home's total value. All other options fail to align with the down payment and LTV ratio, making them invalid choices for the sale price of the home.