Real Estate MathQuestion 116 of 120
A buyer pays 2 discount points on a $180,000 loan. How much do the points cost?
a.$360
b.$1,800
c.$36,000
d.$3,600
Explanation
Each point equals one percent of the loan amount, so 2 points on $180,000 = $180,000 x 0.02 = $3,600. Points are prepaid interest paid to lower the loan's interest rate. They are calculated on the loan amount, not the purchase price.
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