Discount points on a mortgage loan are used to:
Why Buy down the interest rate Is Correct
Answer B: Buy down the interest rate
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
People Also Study
Related North Carolina Questions
- A buyer secures a 30-year fixed mortgage on a $350,000 NC home with 10% down at 7% annual interest. The loan amount is:Real Estate Math
- An investor in NC buys an office building for $1,200,000 with a 25% down payment. The mortgage loan amount is:Real Estate Math
- Which type of mortgage allows the borrower to pay only interest during the loan term, with the full principal due at maturity?Finance
- A North Carolina buyer is purchasing a $300,000 home with 5% down. What is the loan amount?Finance
- A seller in North Carolina agrees to pay 3 discount points on the buyer's $250,000 loan. How much will the seller pay?Finance
- An investor buys a duplex for $280,000 with 25% down. What is the loan amount?Real Estate Math
- If a property is appraised at $325,000 and the lender requires 20% down, what is the maximum loan amount?Real Estate Math
- A 'points' charge on a NC mortgage loan represents:Finance
Key Terms to Know
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
Study This Topic
Practice More North Carolina Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free North Carolina Quiz →