Finance
What is 'points' in mortgage financing and how does paying points affect the interest rate?
APoints are monthly fees charged by the lender
BPoints are upfront fees (each point = 1% of loan amount) that can be paid to reduce (buy down) the interest rate✓ Correct
CPoints are penalties for early payoff
DPoints are required by all Idaho lenders
Explanation
Mortgage points are upfront fees where each point equals 1% of the loan amount. Discount points are paid to reduce the interest rate — typically each point reduces the rate by 0.125-0.25%. Origination points compensate the lender for processing. Whether paying points makes sense depends on how long the borrower keeps the loan.
Related Idaho Finance Questions
- What is a 'no-doc' or 'stated income' loan and why are they less common today in Idaho?
- The secondary mortgage market in Idaho (and nationwide) is primarily used for:
- In Idaho, a lien theory state, which legal instrument is commonly used to secure a real estate loan?
- The loan-to-value (LTV) ratio is calculated as:
- The debt coverage ratio (DCR) used by commercial lenders measures:
- The Truth-in-Lending Act (TILA) requires lenders to disclose which key information to borrowers?
- When a lender requires a borrower to maintain a certain amount in an escrow account for taxes and insurance, the monthly escrow payment is calculated by:
- A wraparound mortgage is BEST described as:
Practice More Idaho Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Idaho Quiz →