At a training session in Springfield, Reese Lopez reviews an Illinois closing statement that shows a loan amount of $520,000.00 and discount points of 1.0. How many dollars are paid in discount points? Which answer is correct?
Correct Answer
D) $5,200.00
One point equals 1% of the loan amount. Multiply $520,000.00 by 0.010 to get $5,200.00.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
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