Fred decided on purchasing a $175,000 home. at closing he brought a check for $8390. the closing costs were as follows:
title fee $545
processing fee $1900
appraisal $695
based on this information, how many points did fred purchase?
a.3
b.1
c.0
d.2

A) 3

Explanation:

Fred first had to cover the closing costs that added up to $3,140, which means that he had $5,250 to buy some mortgage points. Mortgage points are used to lower monthly mortgage payments. One point costs 1% of the total mortgage loan. So each point will cost Fred $1,750, therefore he will be able to purchase 3 points with $5,250 (= $5,250 / $1,750 = 3).

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