Final answer:
The total financing costs are calculated by adding the application fee, credit check fee, appraisal fee, and the points charged on the loan amount. The sum of these amounts to $5,265, making option b the correct answer.
Step-by-step explanation:
To calculate the total financing costs of purchasing a property, we need to consider all the fees charged by the lender as well as the points charged on the purchase price minus the down payment. A point is equal to 1% of the loan amount, which is the purchase price minus the down payment.
First, we add up all the flat fees:
Application fee: $125Credit check: $45
Appraisal: $475
The sum of these fees is $125 + $45 + $475 = $645.
Next, we calculate the loan amount by subtracting the down payment of $58,000 from the purchase price of $289,000, which gives us $231,000.
Two points on the loan amount would be 2% of $231,000, which is 0.02 × $231,000 = $4,620.
Finally, we add the points to the initial fees to obtain the total financing costs: $645 + $4,620 = $5,265.
Therefore, the correct answer is b. $5,265.