Question

the chart shows the costs associated with the purchase of a new home.

components	cost
origination fee	$1,200
closing costs	$4,800
total principal	$246,000
additional taxes	$4,000

what is the best conclusion that can be drawn from the information in the chart?

• it is too expensive for most people to buy a new home.
• there are additional fees and costs involved in taking out a mortgage.
• making a down payment means taxes do not have to be paid.
• fees and taxes make up about 50 percent of the costs of buying a home.

Explanation:

• Option 1: The chart doesn't provide data on what "most people" can afford, so this can't be concluded.
• Option 2: The chart shows origination fee, closing costs, and additional taxes beyond the principal after down payment, so there are additional fees/costs in taking a mortgage. This is supported by the data.
• Option 3: The chart has additional taxes listed, so a down payment doesn't eliminate tax payments. This is incorrect.
• Option 4: Calculate total additional costs (1200 + 4800 + 4000 = 10000) and total home cost (246000 + 10000? Wait, total principal is 246000, plus additional taxes? Wait, total costs: principal after down (240000) + origination (1200) + closing (4800) + additional taxes (4000) = 240000 + 1200 + 4800 + 4000 = 250000. Additional fees/taxes: 1200 + 4800 + 4000 = 10000. 10000 / 250000 = 0.04, so 4%, not 50%. So this is incorrect.

Answer:

B. There are additional fees and costs involved in taking out a mortgage.