Illinois Real Estate Exam Practice Question
A buyer wants to purchase a home for $300,000, with a 20% down payment. The lender charges 2.5 points. How much money does the buyer need up front to make the purchase?
Correct Answer: B
Rationale: To determine the upfront cost for the buyer, first calculate the down payment. A 20% down payment on a $300,000 home is $60,000 (0.20 x $300,000). Next, calculate the points charged by the lender. With a 2.5 points fee, the cost is $7,500 (2.5% of the loan amount, which is $300,000 - $60,000 = $240,000). Adding the down payment and points together gives $60,000 + $7,500 = $67,500.
Option A ($60,000) only covers the down payment. Option C ($61,500) and Option D ($66,000) also fail to account for the points. Thus, the total upfront cost is $67,500.
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