If Buyer A is purchasing a home for $375,000 and is obtaining a mortgage loan at a loan-to-value ratio of 80%, how much will they need to pay in points if the lender charges 2 points?

To determine how much Buyer A will need to pay in points, we first need to calculate the loan amount based on the loan-to-value (LTV) ratio. The LTV ratio is calculated by taking the loan amount as a percentage of the property's purchase price.

In this case, the purchase price of the home is $375,000, and the LTV ratio is 80%. The loan amount can be calculated as follows:

Loan Amount = Purchase Price × LTV Loan Amount = $375,000 × 0.80 = $300,000

Next, we need to calculate the cost of the points. Points are generally a percentage of the loan amount, with one point equal to 1% of the loan. If the lender charges 2 points, we calculate the total cost like this:

Cost of Points = Loan Amount × Number of Points Cost of Points = $300,000 × 0.02 (which is 2 points)

Calculating this gives us:

Cost of Points = $300,000 × 0.02 = $6,000

Thus, Buyer A will need to pay $6,000 in points to the lender. This amount is the correct answer since it is based on the