A "point" is 1% of your borrowed amount on a mortgage. You want to pay 2 points to get a 0.5% reduction in your interest rate on

Question

Studentka2010 [4]

3 years ago

7

A "point" is 1% of your borrowed amount on a mortgage. You want to pay 2 points to get a 0.5% reduction in your interest rate on

a $175,000 mortgage. How much will you pay in points?

Advanced Placement (AP)

2 answers:

Rashid [163] · Answer 1 · 2022-02-18T09:33:43+03:00

Rashid [163]3 years ago

8 0

Answer:

The answer is A ($3,500)

Explanation:

I recently got this question and A was the correct answer. I used the same strategy like the one above me and it worked.

Hope it helps!!

igor_vitrenko [27] · Answer 2 · 2022-02-18T08:08:30+03:00

The answer is $3500.

You are simply asking for the equivalent of 2 points for the mortgage of $175,000. Since 1 point is equal to 1% of the mortgage, 2 points is 2% of the mortgage then.

Equation:
Y = P% * X
Y = 2% * 175000

Convert P into decimal: P = 2/100 = 0.02

Y = 0.02 * 175000
Y = 3500