Question 16

The points at closing amount to $1,480.

Points are calculated as a percentage of the loan amount, with each point representing 1% of the total loan. In this case, a VA loan of $37,000 with 4 points results in the calculation of 4% of $37,000, which equates to $1,480.

A) $925

This option is incorrect because $925 represents a calculation of approximately 2.5% of the loan amount, which does not correspond to the 4 points indicated in the question. The points must be calculated as 4% of the $37,000 loan.

B) $1,480

This option is correct as it accurately reflects the calculation of 4 points on a $37,000 loan. Four points equate to 4% of the loan amount: 0.04 x $37,000 = $1,480.

C) $1,800

This option is incorrect because $1,800 represents approximately 4.86% of the loan amount, which exceeds the 4 points specified. The correct calculation for 4 points would not yield this figure.

D) $3,200

This option is incorrect as it significantly exceeds the amount calculated for 4 points. $3,200 would represent about 8.65% of the loan amount, which is far greater than the 4% needed for this scenario.

Conclusion

The correct answer of $1,480 is derived from accurately applying the percentage of points to the loan amount, confirming that it reflects 4% of the $37,000 VA loan. All other options fail to represent the correct percentage calculation, thus reinforcing why they are not valid answers.