If a home sells for $142,000 and the lender charges 1.75 points for an 80% loan, how much does the buyer pay in loan points?

To determine how much the buyer pays in loan points, start by calculating the loan amount based on the home's selling price and the percentage financed by the lender. If the home sells for $142,000 and the loan is 80% of that, the calculation for the loan amount is:

[

Loan Amount = Selling Price \times Loan Percentage

= 142,000 \times 0.80

= 113,600

]

Now, points are a form of prepaid interest, where each point equals 1% of the loan amount. Since the lender charges 1.75 points, the calculation will be:

[

Points Amount = Loan Amount \times Points Percentage

= 113,600 \times 0.0175

= 1,988

]

Thus, the buyer would pay $1,988 in loan points. This amount corresponds to the charge imposed by the lender for providing the loan and is typically assessed at the closing of the transaction, making it an important factor for buyers to consider in overall financing costs.