PSI Virginia Real Estate Practice Exam

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Get ready for the PSI Virginia Real Estate Exam. Use multiple choice quizzes with hints and explanations to boost your confidence. Ace your exam!

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What amount does one mortgage point cost in relation to the mortgage amount?

1 percent of the mortgage amount
2 percent of the mortgage amount
0.5 percent of the mortgage amount
1.5 percent of the mortgage amount

The correct answer is: 1 percent of the mortgage amount

One mortgage point is defined as an upfront fee that is equal to 1 percent of the total mortgage amount. When a borrower pays one point on a mortgage, they are essentially paying 1 percent of the loan amount to the lender, often in exchange for a reduced interest rate or a lower monthly payment. This means that if the mortgage amount is $200,000, one point would cost the borrower $2,000. Understanding this concept is crucial for borrowers, as points can significantly affect the overall cost of borrowing and the long-term financial implications of a mortgage.