Question

Bob and mary are financing $180,500 for a new home. their lender will approve an interest rate of 5% if bob and mary pay two discount points at closing. how much will this cost them?

Answer 1

Bob and mary are financing $180,500 for a new home. their lender will approve an interest rate of 5% if bob and mary pay two discount points at closing. Cost them is $3,610.

A discount point is 1% of the loan amount. Bob and Mary are paying two points (or 2% of $180,500), which is $3,610.

What is discount points?

• Discount points are a shape of paid ahead of time intrigued that contract borrowers can buy to lower the intrigued rate on their consequent month to month payments.
• Discount points are a one-time expense, paid up front either when a contract is to begin with orchestrated or amid a refinance.
• Each markdown point for the most part costs 1% of the overall credit and brings down the loan’s intrigued rate by one-eighth to one-quarter of a percent.
• Points don’t continuously got to be paid out of the buyer’s stash; they can some of the time be rolled into the advance adjust or paid by the vender.

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