Finance
Discount points paid at loan closing serve what purpose?
AThey reduce the loan origination fee
BEach point equals 1% of the loan amount and can buy down the interest rate✓ Correct
CThey increase the loan-to-value ratio
DThey serve as earnest money for the lender
Explanation
Discount points are prepaid interest. Each point equals 1% of the loan amount. Paying points at closing buys down the mortgage interest rate, reducing monthly payments over the loan term.
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