Finance
Points paid on a mortgage in Minnesota represent:
AOrigination fees that reduce the loan balance
BPrepaid interest paid at closing to buy down the interest rate; one point equals 1% of the loan amount✓ Correct
CThe lender's profit margin on the loan
DInsurance premiums paid in advance
Explanation
Mortgage points (discount points) are prepaid interest paid at closing to reduce the interest rate. One point equals 1% of the loan amount. Paying points makes sense when the borrower plans to stay in the home long enough to recoup the upfront cost through lower monthly payments.
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