New Jersey Real Estate Exam Practice Question
Buyers write an offer for $325,000 with 20% down payment, which is accepted. They must pay 1 1/2 discount points to obtain financing. What amount will they owe for points?
Correct Answer: B
Rationale: To determine the amount owed for discount points, first calculate the loan amount after the down payment. With a purchase price of $325,000 and a 20% down payment, the down payment is $65,000 (20% of $325,000). Therefore, the loan amount is $260,000 ($325,000 - $65,000).
Discount points are a percentage of the loan amount. At 1.5 points, this equates to 1.5% of $260,000, which is $3,900.
Option A ($2,437.50) incorrectly calculates points based on a different loan amount. Option C ($4,875.00) assumes a higher point percentage or loan amount. Option D ($6,500.00) miscalculates the loan amount entirely. Thus, option B accurately reflects the calculation for points owed.
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