Question

A buyer of a house with a sales price of $150,000 is paying a $30,000 down payment and three discount points on the $120,000 loan. What is the total cost of the discount points?

Answer 1

The total cost of three discount points on a $120,000 loan is $3,600, obtained by calculating 1% of the loan amount and then multiplying by 3.

Step-by-step explanation:

A buyer purchasing a house with a sales price of $150,000 pays a $30,000 down payment and is taking out a $120,000 loan. If the buyer is paying three discount points on the loan, the total cost of the discount points can be calculated as follows:

One discount point costs 1% of the loan amount. Therefore, three discount points will cost 3% of the loan amount. To find the total cost of the discount points:

• Calculate 1% of the $120,000 loan: $120,000 * 0.01 = $1,200.
• Multiply this amount by 3 to find the cost of three discount points: $1,200 * 3 = $3,600.

So, the total cost of the discount points would be $3,600.