Illinois Real Estate Practice Exam

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Prepare for the Illinois Real Estate Test. Practice with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

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How much was the investor charged for the two points as a loan origination fee when purchasing the apartment building for $360,000?

5,400
6,480
7,200
8,100

The correct answer is: 6,480

To determine how much the investor was charged for the loan origination fee, which in this case is referred to as "two points," you first need to understand what a point is in real estate financing. One point is equal to 1% of the total loan amount. In this scenario, the apartment building is purchased for $360,000. Thus, two points would be calculated as follows: 1. Calculate the total amount represented by two points: - Two points = 2% of the purchase price. - 2% of $360,000 is calculated as $360,000 × 0.02 = $7,200. This means the investor would be charged $7,200 as a loan origination fee for the two points on the purchase price of the property. The correct option reflects this calculation accurately.