A house sold for $45,000. A VA loan for $37,000 was obtained with 4 points being charged. How much would be charged for points at closing?

Rationale

$1,480 would be charged for points at closing.

Points on a loan are calculated as a percentage of the loan amount. In this case, with a VA loan of $37,000 and 4 points being charged, the total cost for points can be determined by multiplying the loan amount by the points percentage (4% of $37,000).

A ($925) YOUR ANSWER

This amount represents 2.5 points calculated on the loan amount. Specifically, 2.5% of $37,000 equals $925, which does not reflect the total points charged, as the question specifies 4 points.

B ($1,480) CORRECT

By calculating 4 points on a $37,000 loan, we find 4% of $37,000 equals $1,480. This represents the correct amount charged for points at closing, making it the right choice.

C ($1,800) YOUR ANSWER

This figure does not accurately represent any percentage of the loan amount. It is approximately 4.86 points, which exceeds the specified 4 points charged, thus making it an incorrect option.

D ($3,200) YOUR ANSWER

This amount corresponds to about 8.65 points on the loan, which is significantly higher than the 4 points being charged. Therefore, this option does not align with the details of the loan described in the question.

Conclusion

Understanding how points are calculated on loans is crucial in determining closing costs. In this scenario, the calculation confirms that 4 points on a $37,000 VA loan results in a charge of $1,480, illustrating the importance of precise financial calculations in real estate transactions. All other options fail to accurately represent the specified percentage, reaffirming the unique nature of the correct answer.

A house sold for $45,000. A VA loan for $37,000 was obtained with 4 points being charged. How much would be charged for points at closing?

$1,480 would be charged for points at closing.

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