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
Answer (1)
Calculate the real estate agent commission: 0.03 × 185000 = 5550 .
Calculate the sum of all closing costs: 275 + 528 + 750 + 275 + 121 = 1949 .
Calculate the total amount paid at closing: 5550 + 1949 = 7499 .
The total amount paid at closing is 7499 .
Explanation
Understanding the Problem We are given the closing costs for a home loan and the real estate agent commission. We need to find the total amount paid at closing, which includes the sum of all closing costs and the real estate agent commission.
Calculating Real Estate Agent Commission First, we need to calculate the real estate agent commission, which is 3% of the home loan amount of $185,000. To do this, we multiply 0.03 by 185,000: 0.03 × 185 , 000 = 5550
So, the real estate agent commission is $5,550.
Calculating Total Closing Costs Next, we need to find the sum of all closing costs. The closing costs are: Loan origination ($275), Title insurance ($528), Attorney's fees ($750), Appraisal ($275), and Recording fees ($121). We add these costs together: 275 + 528 + 750 + 275 + 121 = 1949 So, the total closing costs are $1,949.
Calculating Total Amount Paid at Closing Finally, we need to find the total amount paid at closing by adding the real estate agent commission and the total closing costs: 5550 + 1949 = 7499 Therefore, the total amount paid at closing is $7,499.
Final Answer The total amount paid at closing is $7,499.
Examples
Imagine you are buying a house and need to budget for all the expenses at closing. This problem helps you calculate the total amount you need to pay upfront, including the real estate agent's commission and various closing costs such as loan origination, title insurance, attorney's fees, appraisal, and recording fees. Knowing this total helps you plan your finances and ensure you have enough funds available at the time of closing. Understanding these costs is a crucial part of the home buying process.
