medium · National Real Estate Exam
From the perspective of a lender, what is the primary purpose of charging discount points on a mortgage loan?
- To provide funds for the borrower's required homeowners' insurance and property tax escrow.
- To pay for the private mortgage insurance required on high-risk conventional loans.
- To cover the administrative costs of processing and originating the loan application.
- To increase the effective yield on the loan without increasing the nominal interest rate.
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