What is the cost of 2 discount points on a $120,000 loan?

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Study for the Burk Baker National Test. Use flashcards and multiple choice questions with hints and explanations to prepare effectively. Get ready for your exam!

Multiple Choice

What is the cost of 2 discount points on a $120,000 loan?

Explanation:
Discount points are prepaid interest used to lower the mortgage rate, and each point costs 1% of the loan amount. For a $120,000 loan, one point costs 1% of 120,000, which is 1,200. Two points would cost 2% of 120,000, which is 2,400. So the cost of two discount points is $2,400.

Discount points are prepaid interest used to lower the mortgage rate, and each point costs 1% of the loan amount. For a $120,000 loan, one point costs 1% of 120,000, which is 1,200. Two points would cost 2% of 120,000, which is 2,400. So the cost of two discount points is $2,400.

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