Alyssa purchased a house for $243,000 and obtained a mortgage for $231,000. She purchased 5 discount points and 4 origination point. What is the cost for each?

Option A: discount: $9,240; origination: $11,550
Option B: discount: $12,150; origination: $9,720
Option C: discount: $9720; origination: $12,150
Option D: discount: $11,550; origination: $9,240

I just wanted to make sure I got the right answer: Option B. I was just curious whether I would multiply it by what she purchased the house ($243,000) or would I multiply it by the mortgage ($231,000)?

Question

Alyssa purchased a house for $243,000 and obtained a mortgage for $231,000. She purchased 5 discount points and 4 origination point. What is the cost for each?

Option A: discount: $9,240; origination: $11,550
Option B: discount: $12,150; origination: $9,720
Option C: discount: $9720; origination: $12,150
Option D: discount: $11,550; origination: $9,240

I just wanted to make sure I got the right answer: Option B. I was just curious whether I would multiply it by what she purchased the house ($243,000) or would I multiply it by the mortgage ($231,000)?

SmokeyBrown · Answer

I'm not familiar with discount points and origination points. I found a resource that might be helpful, but--I'll be honest--I couldn't really make sense of it https://www.investopedia.com/terms/o/originationpoints.asp#:~:text=Key%20Takeaways%201%20There%20are%20two%20types%20of,1%25%20of%20the%20mortgage%20amount.%20More%20items...%20

redsky · Answer

Ah, thank you! I think I found what I was looking for which was my original answer but thank you for the help!