Finance
In Maine, 'points' paid at closing on a mortgage loan are best described as:
AFees paid to the real estate broker
BPrepaid interest paid to the lender to reduce the interest rate, with each point equal to 1% of the loan amount✓ Correct
CTransfer taxes paid to the state
DAttorney fees for the closing
Explanation
Discount points are prepaid interest paid to the lender at closing to buy down (reduce) the interest rate. Each point equals 1% of the loan amount.
People Also Study
Related Maine Questions
- A Maine property sells for $320,000. The buyer obtains a conventional mortgage with a 20% down payment. What is the loan amount?Finance
- A Maine lender charges 2 'points' on a $175,000 mortgage. The dollar amount of the points is:Finance
- A Maine buyer's 30-year mortgage has a monthly payment of $1,650 for principal and interest. Over the life of the loan, the total amount paid in P&I is:Finance
- A Maine home was purchased for $220,000 and the buyer obtains an 80% LTV mortgage. If the interest rate is 6% and the loan is fully amortized in 30 years, the loan amount is:Real Estate Math
- A Maine property sells for $400,000 with a 20% down payment. The buyer's total closing costs (excluding the down payment) are 3% of the loan amount. The total cash needed at closing is:Finance
- A Maine home sells for $450,000. The buyers put down $90,000 and finance the rest. The mortgage recording fee is $30 per $1,000 of the loan amount (hypothetical). The fee is:Real Estate Math
- A Maine home was purchased for $295,000 with a 5% down payment. The PMI rate is 0.85% of the loan amount annually. Monthly PMI is:Real Estate Math
- A Maine buyer wants to offer $320,000 for a property. The down payment is 20% and the buyer must pay 2 discount points. What is the cost of the points?Real Estate Math
Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Transfer TaxA tax imposed by state or local governments when real property ownership is transferred, typically based on the sale price.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Math Concepts
State-Specific Concepts
Transfer Tax
Study This Topic
Practice More Maine Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Maine Quiz →