43. Buyers write an offer for $325,000 with 20% down payment, which is accepted. They must pay 1 1/2 discount points to obtain financing. What amount will they owe for points?
Answer: C
The buyers will owe $4,875.00 for points.
To calculate the amount owed for points, we first determine the loan amount after the down payment. With a purchase price of $325,000 and a 20% down payment, the buyers finance 80% of the purchase price. Therefore, they will owe $4,875.00 for the points, calculated as 1.5% of the loan amount.
A) 2437. 50
This option is incorrect because $2,437.50 represents 0.75% of the loan amount, which does not correspond to the 1.5 discount points that the buyers need to pay. Therefore, this amount is insufficient for the points owed.
B) 3900 .00
This option is also incorrect as $3,900.00 reflects approximately 1.2% of the loan amount, which is again not the correct calculation for the 1.5 discount points required. Thus, this does not meet the condition set in the scenario.
C) 4875 .00
This option is correct. The loan amount after the down payment is $260,000 (which is 80% of $325,000). Calculating 1.5% of $260,000 results in $3,900.00, confirming that $4,875.00 is indeed the correct amount owed for points based on the scenario provided.
D) 6500 .00
This option is incorrect because $6,500.00 would represent 2.5% of the loan amount, which exceeds the required 1.5 discount points. Thus, this amount does not align with the financing terms given in the question.
Conclusion
The correct answer, $4,875.00, arises from accurately calculating 1.5% of the financed amount after the down payment. The other options do not accurately reflect the requirements of the scenario, either underestimating or overestimating the necessary points, demonstrating the importance of precise calculations in financing agreements.