Illinois Real Estate Exam Practice Question
A buyer wants to purchase a home for $325,000 with a 30% down payment. The lender charges 2.25 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 30% down payment on a $325,000 home is $97,500 (0.30 x $325,000). Next, calculate the points charged by the lender. Points are a percentage of the loan amount, which is the home price minus the down payment: $325,000 - $97,500 = $227,500. At 2.25 points, the cost is $5,118.75 (0.0225 x $227,500). Adding the down payment and points gives $97,500 + $5,118.75 = $102,618.75, rounded to $102,619.
Option A ($97,500) only considers the down payment. Option C ($99,694) incorrectly calculates the total costs. Option D ($102,619) rounds the total correctly but does not account for the precise calculation of points. Thus, B ($104,813) is the total amount needed upfront, including both the down payment and points.
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