Tom and cindy lewis are buying a house with a $300,000 sales price and their ltv will be 80%. assume that they paid no originati

Question

19 days ago

11

on fees, but paid $3,600 in discount points. how many total points did they pay?

1 answer:

harina [3.2K] · Answer 1 · 2026-03-17T10:00:54+03:00

Conclusion: Tom and Cindy paid 1.5 discount points.

House Price = $300,000.

Loan-to-Value Ratio (LTV) = 80%

With an LTV of 80%, the total loan amount (mortgage) is:

$Mortgage Value = House Value * LTV$

$Mortgage Value = $240,000 (300,000*0.80)$

In real estate, a point signifies one percent (1%) of the mortgage amount. There is no strict requirement that points be whole numbers.

To calculate the number of points paid, use this method:

$No. of points paid = (Value of points in dollars /Value of mortgage) *100$

$No. of points paid = (\frac{3600}{240000} )* 100 [/tex][tex] No. of points paid = 1.5 points.$

There are two point types:

Discount Points: which are actually pre-paid interest on the mortgage loan, assisting in reducing the mortgage's interest rate.
Origination points: which help cover the lender's costs for processing the loan.