California Real Estate Practice Exam

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Study for the California Real Estate Exam with confidence. Engage with interactive questions designed to enhance your understanding of real estate principles, laws, and practices. Prepare thoroughly for your licensing test and ensure you have the knowledge to succeed in your real estate career!

Practice this question and more.

Buyer A is purchasing a home for $375,000 with an 80% loan-to-value ratio. If the lender charges 2 points, how much will the borrower pay in points?

$6,000
$7,500
$3,000
$12,000

The correct answer is: $6,000

The borrower will pay $6,000 in points. This is because 2 points is equivalent to 2% of the total loan amount, which in this case is $375,000. So 2% of $375,000 is $7,500. However, since the loan-to-value ratio is 80%, the lender will only loan 80% of the total value of the home, which is $375,000. Therefore, the borrower will only be charged 2% of $300,000 (80% of $375,000), resulting in a total of $6,000 in points. Option B is incorrect because it uses the incorrect loan-to-value ratio of 90% instead of 80%, resulting in a higher amount of points charged. Option C is also incorrect because it uses the incorrect loan amount of $400,000 instead of $375,