If a house costs $100,000 and the buyer makes a down payment of $32,000 while obtaining a loan for $68,000 with 4 points, how much will be paid at closing for the points?

To understand how to calculate the amount paid at closing for the points, it's essential to first comprehend what points are in real estate transactions. Points are typically expressed as a percentage of the loan amount, with one point equating to 1% of the total mortgage amount.

In this scenario, the buyer is obtaining a loan for $68,000 and will be charged 4 points. To find the monetary value of the points, you first determine what 4% of the loan amount is.

Here's the calculation:

• Calculate the total points by multiplying the loan amount by the percentage of points: 4 points = 4% of $68,000, which can be calculated as:

  [ 0.04 \times 68,000 = 2,720 ]

This means that the correct amount paid at closing for the points is $2,720. It directly represents the cost for the buyer for obtaining the loan, as points are often prepaid interest to lower the interest rate or for lender profits. Therefore, the correct amount that will be paid at closing for the points is indeed $2,720.