If a couple qualifies for a $250,000 loan with a broker fee of 2 points, what is the dollar amount of that fee?

To determine the dollar amount of the broker fee when a couple qualifies for a $250,000 loan with a broker fee of 2 points, it’s important to understand how points work in real estate financing.

Points are a form of prepaid interest that is expressed as a percentage of the loan amount. In this case, 2 points means 2% of the loan amount. To calculate the dollar amount of the fee, you would take 2% of $250,000.

This calculation can be done as follows:

1. Convert the percentage to a decimal: 2 points = 2% = 0.02.

2. Multiply this decimal by the loan amount: $250,000 x 0.02 = $5,000.

Therefore, the broker fee is $5,000.

This understanding asserts the accuracy of the chosen answer as it reflects a clear calculation and application of points in the context of mortgage loans, particularly in Florida's real estate market.