Illinois Real Estate Exam Practice Question
The terms of a mortgage call for a borrower to pay $3,200 in loan discount points. If the mortgage is $80,000, how many discount points have to be paid?
Correct Answer: B
Rationale: To determine the number of discount points paid, divide the total amount of loan discount points by the mortgage amount. Each discount point typically equates to 1% of the mortgage amount. In this case, $3,200 represents the cost of the points on an $80,000 mortgage.
Calculating the percentage:
$3,200 / $80,000 = 0.04, or 4%.
Since each point is 1%, 4% corresponds to 4 points.
Option A (3) is incorrect as it underestimates the cost.
Option C (5) and Option D (6) overestimate the number of points, miscalculating the percentage based on the total amount paid.
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