Finance
Discount points paid at loan origination are used to:
AIncrease the loan amount
BReduce the interest rate on the loan✓ Correct
CCover the cost of private mortgage insurance
DPay the real estate commission
Explanation
Each discount point equals 1% of the loan amount and is paid upfront to 'buy down' the interest rate. Paying points makes sense when the borrower plans to stay in the home long enough for the monthly savings to offset the upfront cost.
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