Finance
What is 'points' in Delaware mortgage financing?
AThe number of years in the mortgage term
BPrepaid interest paid at closing — each point equals 1% of the loan amount — used to buy down the interest rate or pay loan origination costs✓ Correct
CThe percentage of the loan amount charged as an annual service fee
DThe lender's assessment of the borrower's creditworthiness on a scale of 1–10
Explanation
Mortgage points are prepaid interest paid upfront at closing. Each point equals 1% of the loan amount. Discount points buy down the interest rate (lower rate = lower payment). Origination points cover lender fees. A buyer must calculate the 'break-even' period to determine if paying points makes financial sense.
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