Question

I just need help in finding the answer for C.

The Fritzes are buying a house that sells for $118,000. The bank is requiring a minimum down payment of 10%. To obtain a 20-year mortgage at 12.5% interest, they must pay 2 points at the time of closing a) Determine the required down payment. b) Determine the amount of the mortgage on the property with the 10% down payment. c) Find the cost of 2 points on the mortgage. a) The required down payment is $ 11,800 b) The mortgage on the property is $ 106200 c) The cost of the 2 points on the mortgage is $ (Round to the nearest dollar as needed.) 7.

Answer 1

Mortage points is the fees paid to the lending authority to reduce the interest rates. You pay some amount of money upfront for the reduced interest rates during the repayment period.

1 point costs 1% of the mortgage amount.

So, 2 points = 2% of the mortgage amount = 2% of 106200 = $2124