Real Estate Math
A Nevada property is purchased for $290,000 with 5% down and a 95% LTV loan. The buyer also pays 1.5 discount points. What is the total cost of the discount points?
A$4,132.50✓ Correct
B$2,900
C$4,350
D$3,915
Explanation
Down payment = $290,000 × 0.05 = $14,500. Loan amount = $290,000 - $14,500 = $275,500. Discount points = $275,500 × 0.015 = $4,132.50. Points are calculated on the loan amount, not the purchase price. Each point = 1% of the loan amount. This is a two-step calculation: first determine the loan amount, then calculate points as a percentage of that loan amount.
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