Question

Megan Mei is charged 2 points on a $120,000 loan at the time of closing. The original price of the home before the down payment was $140,000. How much do the points in dollars cost Megan? A. $4,200 B. $2,800 C. $8,200 D. $2,400

Answer 1

Answer: Option 'A' is correct.

Explanation:

Since we have given that

Amount of original price of the home before the down payment = $140000

Amount of loan at the time of closing = $120000

Megan Mei is charged 2 points on that amount means

`2\%\ on\ \$120000\\\\=(2)/(100)* 120000\\\\=0.02* 120000\\\\=\$2400`

Hence, Option 'A' is correct.

Answer 2

1 point = 1% of the loan.
The loan is $120,000.
Therefore 2 points cost 0.02*$120,000 = $2,400

Answer: D. $2,400