Finance
In Alaska, the 'loan discount point' differs from the 'loan origination fee' in that a discount point is:
APaid to a mortgage broker, while origination fees go to the lender
BPrepaid interest that reduces the loan's interest rate, while origination fees are charged for processing the loan✓ Correct
CA percentage of the sale price, not the loan amount
DRefundable if the loan is paid off early
Explanation
Discount points are prepaid interest used to 'buy down' the interest rate. Each point = 1% of the loan amount, and typically reduces the rate by approximately 0.
People Also Study
Related Alaska Questions
- A mortgage lender in Alaska charges a higher interest rate to an applicant because of the neighborhood where the property is located, which has a predominantly minority population. This practice is known as:Fair Housing
- A buyer in Alaska makes an offer of $325,000 with 5% down. The lender requires a loan-to-value not exceeding 95%. What is the maximum loan amount?Real Estate Math
- An Alaska homeowner refinances a $240,000 mortgage to a new loan at a lower rate. The refinance saves $185/month in payments. Closing costs are $5,000. The break-even period is approximately:Real Estate Math
- A buyer in Alaska purchases a $420,000 home, making a 15% down payment. How much private mortgage insurance is required annually if the PMI rate is 0.75% of the loan amount?Real Estate Math
- An Alaska investment property costs $600,000. The investor pays 25% down and finances the rest at a 7.5% annual interest rate (interest only for the first year). What is the first-year annual interest payment?Real Estate Math
- The discount points paid by a borrower at closing primarily serve to:Finance
- A buyer pays 2 discount points on a $350,000 loan. How much does the buyer pay in discount points at closing?Finance
- An Alaska property sells for $350,000. The buyer makes a 20% down payment and finances the rest. What is the loan amount?Finance
Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Closing CostsFees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
Study This Topic
Practice More Alaska Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alaska Quiz →