Answered

The list below shows the closing costs on a home loan amount of $185,000.




Closing Cost		Charge

Loan origination		\$275

Title insurance		\$528

Attorney's fees		\$750

Appraisal		\$275

Recording fees		\$121






If the buyer also paid a $3\%$ real estate agent commission, what was the total amount paid at closing?


A\$2,499
B\$5,550
C\$6,499
D\$7,499

Verified Answer :

  • Sum the listed closing costs: \(275 + 528 + 750 + 275 + 121 = \$1,949\).
  • Calculate the commission: \(0.03 \times \$185,000 = \$5,550\).
  • Add the two values to find the total: \(\$1,949 + \$5,550 = \$7,499\).
  • The correct answer is \(\boxed{\$7,499}\).

Explanation

  1. Calculating the Fixed Closing Costs

To find the total amount paid at closing, we need to calculate the sum of the fixed closing costs and add the real estate agent commission.

The fixed closing costs are:

  • Loan origination: \(\$275\)
  • Title insurance: \(\$528\)
  • Attorney's fees: \(\$750\)
  • Appraisal: \(\$275\)
  • Recording fees: \(\$121\)

The sum of these costs is:
\[S = 275 + 528 + 750 + 275 + 121 = \$1,949\]

  1. Calculating the Real Estate Agent Commission

The real estate agent commission is calculated as \(3\%\) of the home loan amount of \(\$185,000\).
\[C = 0.03 \times \$185,000 = \$5,550\]

  1. Calculating the Total Amount Paid at Closing

The total amount paid at closing is the sum of the fixed closing costs (\(S\)) and the real estate agent commission (\(C\)):
\[T = S + C = \$1,949 + \$5,550 = \$7,499\]
Comparing this result to the given options, we find that the correct choice is \(\$7,499\), which corresponds to option (d). Therefore, the total amount paid at closing is \(\boxed{\$7,499}\).

Examples

In real estate transactions, understanding closing costs is crucial for budgeting. When purchasing a home, you must account for various service fees (like appraisal and legal fees) as well as commissions paid to agents. Knowing how to sum these individual items and calculate percentages correctly allows homebuyers to accurately estimate the total funds needed at the closing table, preventing unexpected financial stress.

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