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Today in “Spruce Answers” I’m going over the real estate math licensing concept of the discount point. This is easier than you might think . The question is… “If a house was sold for $360,000 and the buyer obtained a mortgage loan for $288,000, how much money would the buyer pay in discount points if the lender charged two points?”

What are the steps to solving this discount point math question?

I like this one because this is a pretty easy question. That is as long as you know the concept of a discount point. And since I’m trying to show how the concepts of these questions can be related to many variations why don’t I illustrate this concept here.

That said, the discount point is one percent…. Now there’s two twists on this within this question. One, it’s giving you two numbers to try and throw you off…. One of which you ignore because, well, it wants 1% of the loan amount and only one of those numbers is the loan amount.

Discount Point is 1% of the mortgage amount
A discount point is always 1% of the loan amount

It says the guy obtained a mortgage for $288,000 and that’s the number we now take 1% of. So…

Let’s calculate that… 1% of 288,000 is $2,880

Now the second twist… it says he is getting charged two points…. So… that’s 2%…. The way I do that is simply multiplying 2,880 by 2 which is $5760. Seems way more complicated than it is but if you know that a discount point is 1% you’re good to go.

Is this an easy breakdown?

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