Nationwide Mortgage Licensing System (NMLS) Practice Exam

If the purchase price of a home is $200,000 and the loan amount is $180,000, what is the cost of 1 discount point and 1 origination point at 6% interest?

1. $1,800

2. $2,000

3. $3,600

4. $4,000

The correct answer is: $3,600

To determine the cost of discount points and origination points, it's essential to understand what each point represents. A discount point is typically equal to 1% of the loan amount, and an origination point also usually equals 1% of the loan amount. In this situation, the loan amount is $180,000. Therefore, each point (either discount or origination) would cost 1% of this amount: 1% of $180,000 is calculated as: \[ 0.01 \times 180,000 = 1,800 \] Since both discount points and origination points are charged based on the loan amount and each is 1%, for one of each, the calculations would be: Cost of 1 discount point: $1,800 Cost of 1 origination point: $1,800 Adding both points together gives: \[ 1,800 + 1,800 = 3,600 \] Thus, the cost of 1 discount point and 1 origination point totals $3,600.