Question

you want to buy a house for $216,500. you can get a loan for 90% of value. you will also have to pay 1.5 points on the loan. if you have to pay both the down payment and the loan points at closing, how much will you have to deliver to closing to cover these?

Answer 1

The amount the borrower would deliver at closing is $21,974.75

What does 1.5 points mean for mortgage?

The 1.5 points refer to 1.5% of the loan amount, as a result, the total amount the borrower would have to deliver at closing is the down payment of 10%(100%-90%) plus 1.5% of the loan amount

loan amount=purchase price*90%

purchase price=$216,500

loan amount=$216,500*90%

loan amount=$194,850

down payment=purchase price-loan amount

down payment=$216,500-$194,850

down  payment=$21,650

1.5% of down payment=1.5%*$21,650

1.5% of down payment=$324.75

total payment at closing=$21,650+$324.75

total payment at closing=$21,974.75

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