Finance
What is the primary purpose of 'discount points' paid at closing on a Florida mortgage?
ATo pay for the property appraisal and title search
BTo prepay interest and reduce the note's interest rate✓ Correct
CTo fund the escrow reserve account for taxes and insurance
DTo compensate the mortgage broker for originating the loan
Explanation
Discount points are prepaid interest — each point equals 1% of the loan amount. Paying points upfront 'buys down' the interest rate, resulting in lower monthly payments. Points are generally tax-deductible as prepaid mortgage interest. They differ from origination fees, which compensate the lender for processing.
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