California Real Estate Practice Exam

How much will a borrower pay for 1 point on a mortgage loan of $215,000 to secure a preferred interest rate?

1. $215

2. $2,150

3. $21,500

4. $215,000

The correct answer is: $2,150

A borrower will pay $2,150 for 1 point on a mortgage loan of $215,000 to secure a preferred interest rate. Points are considered prepaid interest and equal 1% of the loan amount. Therefore, option A is incorrect as it is only 1% of the loan amount, not the full loan amount. Option C is incorrect as it is 10% of the loan amount, which would be considered a very high rate for a point. Option D is incorrect as it is the full loan amount and would not be worth it for just 1 point. So, the only logical answer is option B, which is 1% of the loan amount and therefore, the amount a borrower would pay for 1 point to secure the preferred interest rate.