Real Estate FinancingMedium
Points paid at closing are:
- aThe same as the down payment
- Prepaid interest, with 1 point = 1% of loan amount
- cApplied to the principal balance
- dRefundable if the loan is paid early
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.
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