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 are calculated as a percentage of the loan amount, where one point equals 1% of the total loan. In this case, with a VA loan of $37,000 and 4 points charged, the calculation is straightforward: 4% of $37,000 equals $1,480.

A ($925) YOUR ANSWER

This amount represents 2.5% of the loan amount ($37,000), calculated as follows: $37,000 x 0.025 = $925. However, since the loan specifies 4 points, this option does not accurately reflect the total charge for points at closing.

B ($1,480) CORRECT

As previously calculated, 4 points on a loan of $37,000 equals $1,480. This is derived from the equation $37,000 x 0.04 = $1,480, confirming that this is the correct answer based on the terms provided.

C ($1,800) YOUR ANSWER

This figure represents approximately 4.86% of the loan amount ($37,000), calculated as $37,000 x 0.0486 = $1,800. This percentage exceeds the designated 4 points, making it an incorrect choice for this scenario.

D ($3,200) YOUR ANSWER

This amount corresponds to approximately 8.65% of the loan amount ($37,000), calculated as $37,000 x 0.0865 = $3,200. This percentage is significantly higher than the 4 points specified, thus it cannot be the correct charge at closing.

Conclusion

Calculating the charge for points at closing is a straightforward process involving a percentage of the loan amount. In this instance, the 4 points charged on a VA loan of $37,000 results in a total charge of $1,480. The other options do not align with the specified number of points, confirming that $1,480 is the only accurate answer for the closing costs associated with the loan.

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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