New Jersey Real Estate Exam Practice Question
A seller pays 2 discount points when selling a house to a buyer with an FHA mortgage loan. This money is paid to the
Correct Answer: C
Rationale: In this scenario, the seller pays 2 discount points to lower the buyer's interest rate on the FHA mortgage. These points are essentially prepaid interest, which directly benefits the lender by ensuring they receive a lump sum upfront.
Option A, FHA, is incorrect as the points are not paid to the FHA but rather to the lender who services the loan. Option B, buyer, is also incorrect; while the buyer benefits from a reduced interest rate, they do not receive the points directly. Option D, selling licensee, is wrong because the points are not compensation for the agent's services but rather a financial arrangement between the seller and lender.
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