Compare points and lender credits
See this course’s project requirements
A fictional homebuying decision file with ownership costs, cash to close, comparable loan estimates and a closing discrepancy log.
Keep your working files in your own notebook or software. Save a private description, checklist, and work link in My Proof.
What to include
- A rent/ownership comparison with separate cash and principal columns.
- A cash-to-close and remaining-reserve worksheet.
- An annotated loan-estimate comparison sheet.
- A points/credit cash-flow comparison with break-even and limitations.
- A closing-disclosure reconciliation and clarification log.
- A completed fictional home-finance decision file.
Review and revise
Use these criteria to check your work and choose what to improve.
- All supplied records reconcile and the decision uses the named case rules.
- Calculations show units, intermediate values and a second check.
- Changed-input practice revises the affected result and identifies uncertainty.
- The final project combines six lesson records, separates fictional assumptions from current rules, and states a supported next step.
Want more background?
The idea in everyday life
This is an original fictional practice case. No account, payment, personal record or outside participation is required. Same $100,000 loan: offer A has no points; offer B charges one point ($1,000) and saves $25/month. Ignore taxes, prepayment and time value for this simple break-even.
A lower payment purchased with an upfront charge needs a time-to-recover calculation; it is not automatically a saving.
Compare points and lender credits — worked practice
A lower payment purchased with an upfront charge needs a time-to-recover calculation; it is not automatically a saving.
Use paper or a local table; label all amounts as fictional USD unless the case names another unit. Same $100,000 loan: offer A has no points; offer B charges one point ($1,000) and saves $25/month. Ignore taxes, prepayment and time value for this simple break-even.
Points comparison under equal balance assumptions
Paste at A1.
| AOffer | BLoan principal USD | CPoints count | DUpfront points USD | EMonthly saving relative to A USD |
|---|---|---|---|---|
| A | 100000 | 0 | 0 | 0 |
| B | 100000 | 1 | 1000 | 25 |
Copy as plain text
1. Step 1: Convert the point to dollars
Convert the point to dollars.
You should see: 1%×100000=$1,000.
A lower payment purchased with an upfront charge needs a time-to-recover calculation; it is not automatically a saving.
2. Step 2: Divide upfront extra cost by monthly savings
Divide upfront extra cost by monthly savings.
You should see: 1000/25=40 months.
Keep this intermediate result so the final decision can be checked.
3. Step 3: Compare with a stated 24-month expected holding period
Compare with a stated 24-month expected holding period.
You should see: 24×25=$600 savings, below the $1,000 cost.
Keep this intermediate result so the final decision can be checked.
4. Step 4: Write the time-limited result
Write the time-limited result.
You should see: B has not recovered its extra cost by month 24; review uncertainty and full terms rather than treating this as a complete mortgage valuation.
Keep this intermediate result so the final decision can be checked.
What to finish
A points/credit cash-flow comparison with break-even and limitations.
Watch for this
Calling a lower rate cheaper without including the extra closing cost.
How can I tell I understand it?
Calculate a simple mortgage-points recovery period and test it against a holding horizon on the supplied changed case while preserving the stated rule and checking the final record.
Quick knowledge check
Answer all 3 questions. Get at least 2 right and the lesson completes automatically.
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Pass the check. We’ll save the progress.
Answer all 3 questions above and get at least 2 right. You can review the explanations and try again.
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Sources and further reading
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Source & access notes · checked 2026-10-01
Official page opened/read during Money expansion authoring; checked the relevant concept and access state. These sources do not establish funding eligibility.
Access: Readable official webpage inspected with the web reader on 2026-10-01. No interactive-tool operation is claimed.
Reuse: Original fictional practice, questions and calculations; paraphrased concepts with a source link. No source exercise copied.
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