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Points questions on the SAFE MLO Test are one or two steps: the cost of the points, then how long the lower payment takes to pay them back. Enter the loan to check your working.
One discount point costs 1% of the loan amount and buys a lower interest rate. Cost of points = loan amount x points %. Break-even = cost of points / monthly payment saving. Discount points are a prepaid finance charge, so they also raise the APR above the note rate (12 CFR 1026.4).
Working out points on the purchase price. Points are always a percentage of the loan amount: on a $375,000 purchase with a $300,000 loan, 1.5 points cost $4,500, not $5,625.
For study and general guidance only, not legal or lending advice. Figures checked 11 Oct 2026 against 12 CFR 1026.4 (finance charge). Rules change; confirm with the source before relying on a result.
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One point is 1% of the loan amount. On a $300,000 loan, one point costs $3,000.
Divide the cost of the points by the monthly payment saving. $3,000 of points that save $49.05 a month break even after about 62 months.
Yes. Points are a prepaid finance charge under Regulation Z (12 CFR 1026.4), so they are subtracted to get the amount financed and they raise the APR.