Finance
Discount points paid at loan origination are used to:
ACover the lender's origination costs only
BBuy down (reduce) the mortgage interest rate✓ Correct
CPay for title insurance
DCompensate the real estate agent
Explanation
Discount points are prepaid interest paid at closing to reduce (buy down) the loan's interest rate. Each point equals 1% of the loan amount and typically lowers the rate by approximately 0.25%.
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