Answer to Question #255494 in Finance for Liki

Question

The loan amount is 200,000, the down payment is 20,000 and the loan term is 30 years. The interest rate is 5%. To get the 30-year mortgage at 5%, we must pay 2 points at the time of closing. What is the cost of 2 points on the mortgage?

Answer 1

Points represent a percentage of the entire loan amount

Points required=2

Loan amount =200000-20000=180000

Cost of two points=2%*180000

=3600