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. With an 80% LTV, the loan amount covers 80% of the home's price, which means the down payment of $15,000 represents 20% of the total sale price. Thus, the calculation leads us to a sale price of $75,000.
A) $75,000
Option A is correct because if the home price is $75,000, then 20% of this amount, which is the down payment, equals $15,000. This aligns perfectly with the 80% LTV requirement, confirming that the loan amount would be $60,000 (80% of $75,000).
B) $93,750
Option B is incorrect. If the sale price were $93,750, then 20% of that amount would be $18,750, which exceeds the down payment of $15,000. Therefore, it does not satisfy the conditions of the 80% LTV loan with the specified down payment.
C) $100,000
Option C is incorrect as well. A sale price of $100,000 would mean a down payment of $20,000 (20% of $100,000), which also exceeds the provided down payment of $15,000. This option does not meet the requirements set forth in the question.
D) $118,750
Option D is incorrect. At a sale price of $118,750, the down payment would be $23,750 (20% of $118,750), which again is greater than the down payment of $15,000. Thus, this option fails to align with the loan terms.
Conclusion
In conclusion, the correct answer is $75,000 as it accurately reflects the relationship between the down payment and the LTV ratio given in the question. All other options exceed the allowable down payment amount based on the 80% LTV requirement, thereby failing to meet the criteria of the problem.