- Calculate the sum of all fixed costs: \(\$280 + \$476 + \$675 + \$200 + \$118 + \$573 = \$2,322\).
- Determine the realtor commission by multiplying the loan amount by the commission rate: \(0.035 \times \$165,000 = \$5,775\).
- Find the total cost by adding the fixed costs and the commission: \(\$2,322 + \$5,775 = \$8,097\).
- The total amount paid at closing is \(\boxed{\$8,097}\).
Explanation
- Analysis of Closing Costs
To determine the total amount paid at closing, we need to calculate the sum of all fixed closing costs and the variable realtor commission. First, we identify the list of fixed costs: loan origination (\$280), title insurance (\$476), attorney's fees (\$675), inspection (\$200), recording fees (\$118), and escrow (\$573). Next, we identify the realtor commission, which is defined as \(3.5\%\) of the loan amount of \(\$165,000\).
- Calculation of Fixed Costs
We calculate the sum of the fixed costs:
\[\text{Total Fixed} = 280 + 476 + 675 + 200 + 118 + 573 = 2322\]
So, the total fixed closing cost is \(\$2,322\).
- Calculation of Realtor Commission
Now, we calculate the realtor commission, which is \(3.5\%\) of the \(\$165,000\) loan:
\[\text{Commission} = 0.035 \times 165000 = 5775\]
So, the realtor commission is \(\$5,775\).
- Final Calculation
Finally, we calculate the total amount paid at closing by adding the fixed costs and the realtor commission:
\[\text{Total Cost} = 2322 + 5775 = 8097\]
Comparing this result to the given options, we see it matches option d. The total amount paid at closing is \(\boxed{\$8,097}\).
Examples
Understanding how closing costs are calculated is essential when buying a home. For example, if a home buyer knows the fixed administrative costs and the percentage-based commission for a realtor, they can accurately budget their finances. By breaking down costs into fixed fees and variable percentages, a buyer avoids unexpected financial burdens, ensuring the home purchase process is transparent and well-planned. This approach applies to many real-life budgeting scenarios, such as service contracts or purchase agreements.