Real Estate MathIntermediateAlabama Exam

A buyer pays 2.5 discount points on a $200,000 loan. How much does the buyer pay for the points?

Q: A buyer pays 2.5 discount points on a $200,000 loan. How much does the buyer pay for the points?

Points = $200,000 × 2.5% = $5,000. Using the values given ($200,000), apply the appropriate formula.. The correct answer is $5,000.. This is a common calculation on the Alabama real estate exam.

A$5,000Correct

B$2,500 (using an incorrect point rate)

C$4,000

D$3,500

Why $5,000 Is Correct

Answer A: $5,000

Points = $200,000 × 2.5% = $5,000.

Exam Tip: Real Estate Math

Math questions are formula-based. Memorize the key formulas: commission splits, proration, cap rate (NOI ÷ Value), GRM (Price ÷ Gross Rent), and LTV (Loan ÷ Value). Practice converting between annual and monthly figures.

Key Real Estate Math Terms in This Question

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.

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Key Terms to Know

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.

Loan-to-Value Ratio (LTV)

The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.

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