Finance
Points paid on a Wisconsin mortgage loan are also known as:
AOrigination reserves
BDiscount points or loan discount fees✓ Correct
CPMI premiums
DEscrow advances
Explanation
Points (discount points) are prepaid interest paid at closing to reduce the loan's interest rate. Each point equals 1% of the loan amount.
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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.
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.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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