In Ohio mortgage lending, when a lender charges 'points' at closing, one point equals:
Correct Answer
C) 1% of the loan amount
One discount point equals 1% of the loan amount, not the purchase price. For a $200,000 loan, one point would be $2,000. Points are prepaid interest used to buy down the interest rate.
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Related Concepts
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In Ohio, a buyer purchases a home using an FHA loan. The FHA requires the borrower to pay a mortgage insurance premium (MIP). The upfront MIP is currently:
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An Ohio borrower has a fixed-rate mortgage with an amortization schedule. In the early years of the loan, most of each monthly payment goes toward: