85. An owner bought a house for $65,000 and put up $13,000 in cash as a down payment. The owner received a conventional first mortgage loan from a bank and trust that charged the owner 3 points as a service charge for making the loan. What amount will the owner have to pay as the service charge
Answer: B
The owner will have to pay a service charge of $1,560.
The service charge for the mortgage loan is calculated based on the loan amount. In this case, the owner financed $52,000 ($65,000 purchase price minus $13,000 down payment), and the service charge of 3 points is calculated as 3% of this loan amount.
A) $390
This option represents a service charge based on a loan amount of $13,000, which is incorrect. The service charge must be calculated on the financed amount, which is $52,000, not the down payment.
B) $1,560
This is the correct option. The service charge is 3 points of the loan amount of $52,000, calculated as 0.03 x $52,000, which equals $1,560.
C) $1,950
This option incorrectly calculates the service charge. It does not correspond to 3 points on the loan amount but rather suggests a different percentage or a miscalculation of the loan amount.
D) $3,000
This option also misrepresents the service charge. It does not reflect the correct percentage of the financed amount and is significantly higher than what 3 points would equate to based on the actual loan of $52,000.
Conclusion
The correct answer is $1,560 because it accurately reflects the service charge of 3 points on the actual loan amount of $52,000. All other options fail to recognize the correct loan amount or miscalculate the percentage, making them incorrect in the context of the question.