Question

A lender is charging 3 points on a $50,000 loan. The borrower must therefore pay the lender an advance amount of

A) $500
B) $1,500
C) $5,000
D) $15,000

Answer 1

The advance amount the borrower must pay the lender is $1,500. Option B

Step-by-step explanation:

To calculate the advance amount the borrower must pay the lender, we need to determine the value of 3 points on a $50,000 loan.

Points are generally calculated as a percentage of the loan amount. In this case, the lender is charging 3 points, which means they are charging 3% of the loan amount.

So, the advance amount the borrower must pay the lender is 3% of $50,000, which is $1,500. Option B