Tennessee Real Estate License Exam Practice Question
A buyer wants to purchase a home for $150,000 with a 15% down payment. The lender charges 1.75 points. How much money does the buyer need up front to make the purchase?
Correct Answer: D
Rationale: To determine the upfront amount needed for the home purchase, first calculate the down payment. A 15% down payment on a $150,000 home is $22,500 (0.15 x 150,000). Next, the lender charges 1.75 points, which is a percentage of the loan amount (not the home price). The loan amount after the down payment is $127,500 ($150,000 - $22,500). The points cost $2,231.25 (0.0175 x 127,500). Adding the down payment and points gives a total of $24,731.
Options A, B, and C miscalculate either the down payment or the points, leading to incorrect totals.
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