Question

Amy purchased a house for $551,000 and obtained a mortgage for $519,000 she purchased 3 discount points and 2 origination points what is the cost for each?

A. discount points: $16,530, origination points: $11,020

B. discount points:$15,570: origination points: $10,380

C. discount points:$11,020: origination points:$16,530

D. discount points:$10,380: origination points:$15,579

Answer 1

Discount points are normally a type of prepaid interests that lowers the interest on subsequent payments for mortgage borrowers pay.

Each of the points is given by:

1 point = 1% of the mortgage value.

Therefore,
Cost of discount points = 0.01*519,000*3 = $15,570
Cost of origination points = 0.01*519,000*2 = $10,380

In this regard, option B. is the correct answer on the cost of discount and origination points respectively.