The Smithwicks obtained a loan for a new home. If they paid $6,150 for points at closing on a $400,000 home, how many points did they pay?

To determine how many points the Smithwicks paid, you need to understand what points are in the context of mortgage loans. Points are typically expressed as a percentage of the loan amount, where one point equals 1% of the total loan.

In this case, the Smithwicks paid $6,150 in points on a $400,000 loan. First, calculate what percentage of the loan amount this payment represents. To find the number of points, you divide the amount paid in points by the loan amount and then multiply by 100 to express it as a percentage.

The calculation is as follows:

1. Calculate the points as a percentage of the loan:

[

\text{Points} = \left( \frac{\text{Amount Paid in Points}}{\text{Loan Amount}} \right) \times 100

]

[

\text{Points} = \left( \frac{6,150}{400,000} \right) \times 100

]

[

\text{Points} = 0.015375 \times 100 = 1.5375

]

This means that the Smithwicks paid approximately