Final answer:
The amount of a 25% down payment on a home selling for $464,700 is $116,175, which is option C.
Step-by-step explanation:
If the selling price of a home is $464,700 and the buyer makes a 25% down payment, we need to calculate 25% of the selling price to find the down payment amount. To do this, you can multiply the total cost of the home by 0.25:
$464,700 × 0.25 = $116,175
Therefore, the amount of the down payment is $116,175, which corresponds to option C.
Down payment (also called a deposit in British English), is an initial up-front partial payment for the purchase of expensive items/services such as a car or a house. It is usually paid in cash or equivalent at the time of finalizing the transaction. A loan of some sort is then required to finance the remainder of the payment.
The main purposes of a down payment is to ensure that the lending institution has enough capital to create money for a loan in fractional reserve banking systems and to recover some of the balance due on the loan in the event that the borrower defaults. In real estate, the asset is used as collateral in order to secure the loan against default.
If the borrower fails to repay the loan, the lender is legally entitled to sell the asset and retain enough of the proceeds to repay the remaining balance on the loan, including fees and interest added. A down payment, in this case, reduces the lender's risk to less than the value of the collateral, making it more likely that the lender will recover the full amount in the event of default.