Finance
A 'points' charge on a mortgage loan represents:
AA. Credit scores required for loan approval
BB. Prepaid interest equal to 1% of the loan amount per point✓ Correct
CC. The lender's profit margin above the prime rate
DD. Monthly mortgage insurance premium
Explanation
One mortgage point equals 1% of the loan amount. Points may be paid to lower the interest rate (discount points) or as origination points (lender fees). Points paid for rate reduction are generally tax-deductible.
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