Question

The home that you want to purchase requires that you pay 2.5 points towards a $175,210 loan. Determine the cost of the home after the points have been applied.

Answer 1

A. 179,590.25

Explanation:

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Answer 2

Mortgage points mean a certain percentage towards a current loan. Since you were required to pay an additional 2.5 points, that would mean paying an extra 2.5% of the current load. To show this:

175210 * 2.5% = 4380.25
175210 + 4380.25 = 179590.25

Therefore, the new cost of the home would be $179,590.25