63. Buyers write an offer for $325,000 with 20% down payment, which is accepted. They must pay 1 1/2 discount points to obtain financing. What amount will they owe for points?
Answer: B
Buyers will owe $3,900.00 for points.
To calculate the amount owed for points, the buyers first need to determine the loan amount after the down payment. With a purchase price of $325,000 and a 20% down payment, the total loan amount becomes $260,000. They must then pay 1.5 discount points, which translates to $3,900.00.
A) 2,437.50
This amount is incorrect. If calculated as points on the total purchase price, it would imply a different down payment percentage or point rate. Specifically, 1.5 points on the loan amount would not yield this figure.
B) 3,900.00
This amount is correct. It is calculated as 1.5% of the loan amount, which is $260,000. Therefore, 1.5 points (or 0.015) multiplied by $260,000 results in $3,900.00.
C) 4,875.00
This option is incorrect as it suggests a higher percentage of points than what is actually being charged. Calculating 1.5 points on the loan amount does not support this figure, indicating a misunderstanding of point calculations.
D) 6,500.00
This amount is also incorrect. It would reflect a much higher percentage of points than 1.5%, likely over 2.5 points on the loan amount. This does not align with the given conditions of the financing terms.
Conclusion
The correct answer of $3,900.00 reflects an accurate calculation based on the loan amount and the specified discount points. All other options fail because they either miscalculate the percentage or misinterpret the loan amount, demonstrating a lack of understanding of how discount points are applied in real estate financing.