For each "point" you pay on a mortgage, you get a one-quarter percent reduction in the interest rate. You want to get a .375% reduction on your interest rate. How many points do you have to pay?

For each "point" you pay on a mortgage, you get a one-quarter percent reduction in the interest rate. You want to get a .375% reduction on your interest rate. The points we have to pay is 1.5 points.

Further Explanation:

Mortgage:

The mortgage is used to raise funds by the real property owners. It is a borrowed amount or a loan taken from the bank or any from any lender. The amount is repaid with the interest to the bank or the lender.

Step 1:

Compute the number of points to be paid:

Number of points = Reduction on interest ÷ one-quarter percent reduction

= 0.375 ÷ 0.25

= 1.428 or around 1.5 points

Therefore, 1.5 points we have to pay.

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Answer Details:

Grade: High School

Chapter: Mortgage

Subject: Business Studies

Keywords:

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