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.

How much total interest will a borrower pay on a $250,000, 30-year, fixed-rate, amortized loan at 5%, when the monthly payment is $1,342.50?

$233,300
$483,000
$100,000
$150,250

The correct answer is: $233,300

The total interest paid on a loan is determined by multiplying the total number of monthly payments (in this case, 30 years x 12 months = 360 total payments) by the monthly payment amount. In this case, the borrower will make 360 payments of $1,342.50, resulting in a total of $483,000 paid over the life of the loan. However, since the original loan amount was only $250,000, this means that $233,300 of the total amount paid will be interest. Options C and D are incorrect because they do not take into account the length of the loan or the fact that it is a fixed-rate loan with interest compounding over time. Option B is incorrect because it does not take into account the original loan amount, only the total amount paid.