In addition to the following closing costs listed below, the buyer pays a realtor commission that is $3.5 \%$ of the loan amount.
\begin{tabular}{|c|c|}\hline Closing Cost & Charge \\\hline Loan origination & $280 \\\hline Title insurance & $476 \\\hline Attorney's fees & $675 \\\hline Inspection & $200 \\\hline Recording fees & $118 \\\hline Escrow & $573 \\\hline\end{tabular}
If the loan amount is $165,000, how much was paid at closing?
A. $2,322
B. $2,899
C. $5,775
D. $8,097
Answer (2)
Calculate the realtor commission: $165,000 times 0.035 = $5,775.
Sum the given closing costs: $280 + $476 + $675 + $200 + $118 + $573 = $2,322. - Add the realtor commission to the sum of other closing costs: $5,775 + $2,322 = $8,097.
The total amount paid at closing is $8 , 097 .
Explanation
Understanding the Problem We are given a list of closing costs and a loan amount. We need to calculate the realtor commission, then add it to the sum of the other closing costs to find the total amount paid at closing.
Calculating Realtor Commission First, let's calculate the realtor commission, which is 3.5% of the loan amount of $165,000. To do this, we multiply the loan amount by 0.035: 165 , 000 × 0.035 = 5775 So, the realtor commission is $5,775.
Summing the Closing Costs Next, we sum all the given closing costs: Loan origination: $280 Title insurance: $476 Attorney's fees: $675 Inspection: $200 Recording fees: $118 Escrow: $573 Adding these costs together: 280 + 476 + 675 + 200 + 118 + 573 = 2322 So, the sum of the closing costs (excluding realtor commission) is $2,322.
Calculating Total Closing Costs Now, we add the realtor commission to the sum of the other closing costs to find the total amount paid at closing: 5775 + 2322 = 8097 Therefore, the total amount paid at closing is $8,097.
Final Answer The total amount paid at closing is $8,097.
Examples
When purchasing a home, understanding closing costs is essential for budgeting. This calculation helps buyers determine the total expenses beyond the property's price, including realtor commissions, loan origination fees, and other charges. Knowing these costs upfront allows for better financial planning and avoids surprises during the closing process. For example, if you're buying a house and need to secure a loan, calculating these costs ensures you have enough funds available.
The total amount paid at closing is $8,097, which includes the realtor commission of $5,775 and other closing costs totaling $2,322.
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