Finance
A lender's 'points' are best described as:
APercentage points added to the prime rate
BPrepaid interest, with each point equal to 1% of the loan amount✓ Correct
CA flat fee charged for credit report processing
DA penalty for early loan repayment
Explanation
Discount points are prepaid interest. Each point equals 1% of the loan amount. Paying points typically lowers the interest rate, which reduces monthly payments over the life of the loan. They are deductible as mortgage interest for tax purposes.
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