Which of the following is not true about a loan discount point? a. A point is purchased at the time of closing

Question

Which of the following is not true about a loan discount point?
a.
A point is purchased at the time of closing.
b.
A point is purchased for 1% of the loan amount.
c.
A point reduces the interest rate by 1%.
d.
A point bought will reduce the monthly mortgage payment.

GPT-5 mini · Answer

Answer: c.

Explanation: A discount point equals 1% of the loan paid at closing and lowers the interest rate, thereby reducing the monthly payment. It does not typically lower the rate by a full 1 percentage point; the actual reduction per point is usually a fraction (commonly around 0.125%–0.25% per point), varying by lender and market.

Which of the following is not true about a loan discount point?
a.
A point is purchased at the time of closing.
b.
A point is purchased for 1% of the loan amount.
c.
A point reduces the interest rate by 1%.
d.
A point bought will reduce the monthly mortgage payment.

All Answers 1

Submit Your Answer

Which of the following is not true about a loan discount point? a. A point is purchased at the time of closing. b. A point is purchased for 1% of the loan amount. c. A point reduces the interest rate by 1%. d. A point bought will reduce the monthly mortgage payment.

All Answers 1

Submit Your Answer

Which of the following is not true about a loan discount point?
a.
A point is purchased at the time of closing.
b.
A point is purchased for 1% of the loan amount.
c.
A point reduces the interest rate by 1%.
d.
A point bought will reduce the monthly mortgage payment.