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Points paid at closing are:
Correct Answer
B) Prepaid interest, with 1 point = 1% of loan amount
Discount points are prepaid interest paid at closing to reduce the interest rate. One point equals 1% of the loan amount. Paying points can lower monthly payments but increases closing costs.
Answer Options
A
The same as the down paymentB
Prepaid interest, with 1 point = 1% of loan amountC
Applied to the principal balanceD
Refundable if the loan is paid earlyVideo Explanation3 min
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Related Topics & Key Terms
Related Topics:
closing-costsloan-origination-feesapr-calculationmortgage-qualification
Key Terms:
discount pointsprepaid interestloan-to-valuemortgage rate buydownclosing costs
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