Finance
In a New Jersey transaction, points paid to reduce the interest rate are also called:
AOrigination fees
BDiscount points✓ Correct
CTransfer fees
DPrepayment penalties
Explanation
Discount points are upfront fees paid to the lender to buy down the interest rate. Each point equals 1% of the loan amount and reduces the rate by approximately 0.
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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.
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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Math Concepts
State-Specific Concepts
Transfer Tax
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