A seller agrees to pay 3.5 discount points on a buyer's $320,000 loan to buy down the interest rate. How much will the seller pay in points?
Why $11,200 Is Correct
Answer B: $11,200
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
People Also Study
Related California Questions
- A buyer pays 3 discount points on a $420,000 loan. How much does the buyer pay in discount points?Real Estate Math
- A borrower pays $1,610/month in principal and interest on a 30-year fixed mortgage at 6.5%. If the original loan amount was $254,000, how much total interest is paid over the life of the loan?Real Estate Math
- A lender charges 2 discount points and a 1% origination fee on a $350,000 loan. What is the total amount the borrower pays in points and origination fees at closing?Real Estate Math
- A home is purchased for $480,000 with a 20% down payment. The buyer pays 1% of the loan amount as an origination fee. How much is the origination fee?Real Estate Math
- What term describes the process by which a lender reduces the risk of an ARM by capping how much the interest rate can change at each adjustment period and over the life of the loan?Finance
- A loan in which the interest rate changes periodically based on a financial index is called a(n):Finance
- The annual percentage rate (APR) on a loan differs from the interest rate because it includes:Finance
- Discount points paid at loan origination are used to:Finance
Key Terms to Know
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
AmortizationThe 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.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →