Question

Jerry recently obtained an 65% loan on his $295,000 home, and he had to pay $4,300 for points. How many points did he pay?

a. 2.2 points
b. 1.5 points
c. 1.8 points
d. 3.4 points

Answer 1

Jerry paid for approximately 2.2 mortgage points on his loan, calculated by dividing the cost he paid for the points by the loan amount, and then converting that figure to a percentage.

Step-by-step explanation:

To determine how many points Jerry paid for the mortgage on his $295,000 home, we first need to calculate the amount of the loan he obtained, which is 65% of the home's value. This can be found as follows:

$295,000 × 0.65 = $191,750

Mortgage points are typically calculated as a percentage of the total loan amount. Jerry paid $4,300 for points on his loan. To find the number of points, we divide the dollar amount paid for the points by the loan amount and then multiply by 100 to get the percentage:

$4,300 ÷ $191,750 = 0.0224 × 100 = 2.24

Therefore, Jerry paid for approximately 2.2 mortgage points.