What is 'points' in Delaware mortgage financing?
Why Prepaid interest paid at closing — each point equals 1% of the loan amount — used to buy down the interest rate or pay loan origination costs Is Correct
Answer B: Prepaid interest paid at closing — each point equals 1% of the loan amount — used to buy down the interest rate or pay loan origination costs
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
People Also Study
Related Delaware Questions
- Discount points paid at loan closing serve what purpose?Finance
- Plottage value results from:Property Valuation
- Paired sales analysis is used in appraisal to:Property Valuation
- In the income approach, before applying the cap rate, the appraiser must estimate:Property Valuation
- An investor purchases a Delaware property for $500,000 with a 25% down payment and obtains a mortgage for the balance. Closing costs are $8,000 (paid in cash). What is the investor's total cash investment at closing?Real Estate Math
- A Delaware property is purchased for $275,000 with 20% down. The mortgage rate is 7% annually on a 30-year loan. What is the loan amount?Real Estate Math
- A Delaware buyer puts 5% down on a $320,000 home. The lender requires PMI at an annual rate of 0.85% of the original loan amount. What is the annual PMI premium?Real Estate Math
- A Delaware property is appraised at $310,000. The lender will loan 80% of appraised value. What is the maximum loan amount?Finance
Key Terms to Know
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
Study This Topic
Practice More Delaware Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Delaware Quiz →