- Calculate the total of all fixed closing costs: \(280 + 476 + 675 + 200 + 118 + 573 = 2,322\).
- Determine the realtor commission by calculating \(3.5\%\) of the \(\$165,000\) loan: \(165,000 \times 0.035 = 5,775\).
- Add the fixed costs and the commission to find the total payment: \(2,322 + 5,775 = 8,097\).
- The correct option is d, resulting in \(\boxed{\$8,097}\).
Explanation
- Analysis of Closing Costs
To determine the total amount paid at closing, we need to account for two main components: the fixed closing costs and the realtor commission. The fixed closing costs include the loan origination, title insurance, attorney's fees, inspection, recording fees, and escrow. The realtor commission is a variable cost calculated as a percentage of the total loan amount. We have the following data:
- Loan origination: \(\$280\)
- Title insurance: \(\$476\)
- Attorney's fees: \(\$675\)
- Inspection: \(\$200\)
- Recording fees: \(\$118\)
- Escrow: \(\$573\)
- Loan Amount: \(\$165,000\)
- Realtor commission rate: \(3.5\%\) of the loan amount.
- Summing Fixed Costs
First, we calculate the total sum of the fixed closing costs by adding them together:
\[\text{Total Fixed Costs} = 280 + 476 + 675 + 200 + 118 + 573 = 2,322\]
Thus, the sum of the fixed charges is \(\$2,322\).
- Calculating Realtor Commission
Next, we calculate the realtor commission by applying the commission rate of \(3.5\%\) (which is \(0.035\) in decimal form) to the loan amount of \(\$165,000\):
\[\text{Commission} = 165,000 \times 0.035 = 5,775\]
So, the realtor commission is \(\$5,775\).
- Total Closing Calculation
Finally, the total amount paid at closing is the sum of the fixed costs and the realtor commission:
\[\text{Total Paid} = 2,322 + 5,775 = 8,097\]
Comparing this result to the given options:
A\(\$2,322\)
B\(\$2,899\)
C\(\$5,775\)
D\(\$8,097\)
The correct total amount paid at closing is \(\$8,097\), which matches option d. Thus, \(\boxed{\$8,097}\).
Examples
Understanding how to calculate closing costs is a vital skill for anyone purchasing a home. When a buyer receives a "Loan Estimate" document from their lender, it lists various fees like appraisal, title insurance, and realtor commissions. By summing these correctly, a buyer can accurately budget for the funds required on the day they sign the paperwork, ensuring they are not caught off guard by unexpected out-of-pocket expenses. Being proficient with these calculations empowers buyers to navigate the real estate closing process with confidence.