What is the amount of the loan discount for a loan of $1,500,000 with 5 discount points?

What is the amount of the loan discount for a loan of $1,500,000 with 5 discount points?

• A. Less than $75,000
• B. $75,000
• C. $100,000
• D. More than $150,000

Answer: (B)

To determine the loan discount amount for a loan of $1,500,000 with 5 discount points, it is essential to understand how discount points work. A discount point is typically equal to 1% of the total loan amount. Therefore, to calculate the amount corresponding to the 5 discount points, you take 5% of the loan amount. In this case: 1. Calculate 5% of $1,500,000: 5% of $1,500,000 equals $1,500,000 multiplied by 0.05, which equates to $75,000. This indicates that the loan discount for this particular loan, when 5 discount points are applied, amounts to $75,000. This calculation shows that the correct answer is indeed exactly $75,000. Understanding this calculation is crucial for appraisers and those in the real estate finance sector, as it reflects how discount points function as a method to reduce the interest rate on a loan or to help with closing costs.

To determine the loan discount amount for a loan of $1,500,000 with 5 discount points, it is essential to understand how discount points work. A discount point is typically equal to 1% of the total loan amount. Therefore, to calculate the amount corresponding to the 5 discount points, you take 5% of the loan amount.

In this case:

1. Calculate 5% of $1,500,000:

5% of $1,500,000 equals $1,500,000 multiplied by 0.05, which equates to $75,000.

This indicates that the loan discount for this particular loan, when 5 discount points are applied, amounts to $75,000. This calculation shows that the correct answer is indeed exactly $75,000. Understanding this calculation is crucial for appraisers and those in the real estate finance sector, as it reflects how discount points function as a method to reduce the interest rate on a loan or to help with closing costs.