Finance
Discount points paid at closing on a Minnesota mortgage loan:
AIncrease the loan amount
BPrepay interest to obtain a lower interest rate✓ Correct
CReduce the required down payment
DEliminate the need for an appraisal
Explanation
Each discount point equals 1% of the loan amount and prepays interest, resulting in a lower interest rate for the life of the loan. Paying points makes sense if the borrower plans to hold the loan long-term.
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