Buyers write an offer for $325,000 with 20% down payment, which is accepted. They must pay 1 1/2 discount points to obtain financing. What amount will they owe for points?

Rationale

$3,900.00 will be owed for points.

To calculate the amount owed for discount points, we first determine the loan amount after the down payment. The buyers' down payment of 20% on a $325,000 home is $65,000, leaving a loan amount of $260,000. The discount points, calculated at 1.5% of the loan amount, result in $3,900.00 owed for points.

A (2,437.50) YOUR ANSWER

This amount represents 0.75% of the loan amount, which does not correspond to the 1.5 discount points required. The calculation for points must reflect the full percentage specified in the question. Therefore, this choice is incorrect.

B (3,900.00) CORRECT

This is the correct calculation for the discount points. The loan amount of $260,000 multiplied by the 1.5% (0.015) for discount points equals $3,900.00, making this the accurate amount owed for points.

C (4,875.00) YOUR ANSWER

This figure represents 1.875% of the loan amount, which exceeds the discount points specified in the question. The calculation must strictly adhere to the 1.5% requirement, thus making this choice incorrect.

D (6,500.00) YOUR ANSWER

This amount suggests a discount point calculation of 2.5% on the loan amount, which is again not aligned with the specified 1.5 points. Therefore, this choice is also incorrect.

Conclusion

The correct amount owed for discount points in this scenario is $3,900.00, derived from applying the 1.5% rate to the loan amount of $260,000 after the down payment. Each of the other options incorrectly applies a different percentage or calculation method, highlighting the importance of precise percentage application in financial computations.

Buyers write an offer for $325,000 with 20% down payment, which is accepted. They must pay 1 1/2 discount points to obtain financing. What amount will they owe for points?

$3,900.00 will be owed for points.

Related Questions

Related Quizzes

How familiar were you with this question?

Report an Issue

Rate this Practice Test