- Sum the listed closing costs: \$275 + \$528 + \$750 + \$275 + \$121 = \$1,949.
- Calculate the 3% commission on the \$185,000 loan: 0.03 \times \$185,000 = \$5,550.
- Add the closing costs and the commission to find the total: \$1,949 + \$5,550 = \$7,499.
- The total amount paid at closing is \(\boxed{\$7,499}\).
Explanation
- Calculating the Sum of Closing Costs
To determine the total amount paid at closing, we must first sum the individual closing costs and then add the real estate agent's commission. The listed closing costs are:
- Loan origination: \$275
- Title insurance: \$528
- Attorney's fees: \$750
- Appraisal: \$275
- Recording fees: \$121
Summing these individual charges, we calculate:
\[S = 275 + 528 + 750 + 275 + 121 = 1949\]
Thus, the total of all listed closing costs is \$1,949.
- Calculating the Real Estate Agent's Commission
The real estate agent's commission is 3% of the loan amount of \$185,000. We calculate this by multiplying the loan amount by 0.03:
\[C = 0.03 \times 185000 = 5550\]
Therefore, the commission is \$5,550.
- Calculating the Total Amount Paid at Closing
Finally, we combine the total of the closing costs and the commission to find the total amount paid at closing:
\[T = S + C = 1949 + 5550 = 7499\]
The total amount paid at closing is \$7,499. Comparing this to the provided options, we see that it matches option d.
Examples
Understanding how to calculate total closing costs is essential when purchasing property, as it helps buyers prepare their finances beyond the mortgage payment itself. For instance, when planning for a down payment and loan, being aware of auxiliary costs like title insurance, appraisal fees, and commissions allows a buyer to create a comprehensive budget. This practice ensures that no hidden costs surprise the buyer, promoting better financial management and informed decision-making in real estate transactions.