Question

Hudson decided to buy a $275,000 home. At closing, he brought a check for

$8840. The closing costs were as follows:
Based on this information, how many points did Hudson purchase?
Ο Α. Ο
B. 2
Title fee
$645
Processing fee $1900
Appraisal
$795
OC. 3
4

Answer 1

We can start by finding the total closing costs.

Total closing costs = Title fee + Processing fee + Appraisal

Total closing costs = $645 + $1900 + $795

Total closing costs = $3340

We know that Hudson brought a check for $8840 to the closing, so we can subtract the total closing costs to find out how much of that check was used to purchase points.

$8840 - $3340 = $5500

We also know that each point costs 1% of the total loan amount.

1 point = 1% of $275,000 = $2750

So we can divide the amount used to purchase points by the cost per point to find out how many points Hudson purchased.

$5500 ÷ $2750 = 2

Therefore, Hudson purchased 2 points. The answer is B.

Explanation: