Jamie and Danny are financing their new $275,000 home with a 7.5 percent,30-year mortgage.They will be making a $55,000 down payment and paying 1 point.How much will the point cost in dollars?

Question

Quizplus · Accepted Answer

The point cost is calculated as 1% of the mortgage amount, not the home's purchase price. Since they're making a $55,000 down payment on a $275,000 home, the mortgage amount is $275,000 - $55,000 = $220,000. Therefore, 1 point costs 1% of $220,000, which is $2,200.

Jamie and Danny Are Financing Their New $275,000 Home with a 7.5