California Real Estate Practice Exam

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Master the California Real Estate Exam with our comprehensive practice quiz. Get expert tips, detailed content review, and insider strategies to pass on your first try.

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Buyer A is purchasing a home for $375,000 with an 80% loan-to-value ratio. If the lender charges 2 points, how much will the borrower pay in points?

$6,000
$7,500
$3,000
$12,000

The correct answer is: $6,000

The borrower will pay $6,000 in points. This is because 2 points is equivalent to 2% of the total loan amount, which in this case is $375,000. So 2% of $375,000 is $7,500. However, since the loan-to-value ratio is 80%, the lender will only loan 80% of the total value of the home, which is $375,000. Therefore, the borrower will only be charged 2% of $300,000 (80% of $375,000), resulting in a total of $6,000 in points. Option B is incorrect because it uses the incorrect loan-to-value ratio of 90% instead of 80%, resulting in a higher amount of points charged. Option C is also incorrect because it uses the incorrect loan amount of $400,000 instead of $375,