National Real Estate Exam Quiz: Apply Loan Calculations
20 questions · exam conditions
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Apply Loan CalculationsQuestion 1 of 20

A borrower pays 2.5 discount points on a $275,000 loan. Each point reduces the interest rate by 0.25%. If the original rate was 6.5%, what is the total cost of the points and the new interest rate?

Points cost $6,875 with new rate of 5.875%
Points cost $6,875 with new rate of 6.125%
Points cost $5,500 with new rate of 5.875%
Points cost $5,500 with new rate of 6.125%
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National Real Estate Exam Quiz

National Real Estate Exam Quiz: Apply Loan Calculations

Practice Apply Loan Calculations in National Real Estate Exam with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Apply Loan Calculations, giving you a quick way to practice the rules, question types, and explanations that matter most for National Real Estate Exam.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

A borrower pays 2.5 discount points on a $275,000 loan. Each point reduces the interest rate by 0.25%. If the original rate was 6.5%, what is the total cost of the points and the new interest rate?

  1. Points cost $6,875 with new rate of 5.875% (correct answer)
  2. Points cost $6,875 with new rate of 6.125%
  3. Points cost $5,500 with new rate of 5.875%
  4. Points cost $5,500 with new rate of 6.125%
Explanation: Points cost = $275,000 × 0.025 = $6,875. New rate = 6.5% - (2.5 × 0.25%) = 6.5% - 0.625% = 5.875%. Each discount point equals 1% of the loan amount.

Question 2

An adjustable rate mortgage has an initial rate of 4.25% on a $375,000 balance. If the rate adjusts to 5.75% after one year, what is the increase in monthly interest?

  1. $468.75 (correct answer)
  2. $562.50
  3. $1,328.13
  4. $1,796.88
Explanation: Old monthly interest = ($375,000 × 0.0425) ÷ 12 = 1,328.13.Newmonthlyinterest=(1,328.13. New monthly interest = (375,000 × 0.0575) ÷ 12 = $1,796.88. Increase = $1,796.88 - $1,328.13 = $468.75 per month.

Question 3

An investor buys a $500,000 rental with 20% down and a 15-year loan at 5.00%; what is the Loan-to-Value (LTV) ratio?

  1. 83.33% ($500,000 ÷ $600,000)
  2. 20.00% ($100,000 ÷ $500,000)
  3. 75.00% ($375,000 ÷ $500,000)
  4. 80.00% ($400,000 ÷ $500,000) (correct answer)
Explanation: This question tests the application of loan calculations in real estate, focusing on LTV, interest, and amortization. Understanding these calculations is crucial for evaluating real estate investments and managing financial commitments. In this scenario, key details such as the purchase price, down payment, and interest rate guide the calculations for LTV. The correct choice accurately reflects the calculated LTV ratio or payment amount, demonstrating the student's ability to apply formulas correctly. A common distractor may confuse down payment percentage with LTV. To aid understanding, students should practice using standard formulas for LTV and amortization, and verify calculations with real-world examples. Encourage the use of financial calculators for accuracy.

Question 4

A property is valued at $400,000. If the lender requires a maximum LTV of 85%, what is the maximum loan amount?

  1. $340,000 (correct answer)
  2. $320,000
  3. $360,000
  4. $380,000
Explanation: Maximum loan = Property Value × Maximum LTV = $400,000 × 0.85 = 340,000.ChoiceB(340,000. Choice B (320,000) uses 80% LTV instead of 85%. Choice C (360,000)uses90360,000) uses 90% LTV instead of 85%. Choice D (380,000) uses 95% LTV instead of 85%.

Question 5

A loan has a principal balance of $180,000 and an annual interest rate of 4.5%. What is the annual interest payment?

  1. $8,100 (correct answer)
  2. $7,200
  3. $9,000
  4. $6,750
Explanation: Annual interest = Principal × Annual Rate = $180,000 × 0.045 = 8,100.ChoiceB(8,100. Choice B (7,200) uses 4% rate instead of 4.5%. Choice C (9,000)uses59,000) uses 5% rate instead of 4.5%. Choice D (6,750) uses 3.75% rate instead of 4.5%.

Question 6

If a lender allows a maximum LTV of 90% on a $225,000 property, what is the minimum down payment required?

  1. $22,500 (correct answer)
  2. $20,250
  3. $25,000
  4. $18,000
Explanation: Maximum loan = $225,000 × 0.90 = $202,500. Minimum down payment = $225,000 - $202,500 = 22,500.ChoiceB(22,500. Choice B (20,250) uses 91% LTV instead of 90%. Choice C (25,000)usesincorrectcalculation.ChoiceD(25,000) uses incorrect calculation. Choice D (18,000) uses 92% LTV instead of 90%.

Question 7

A lender charges 2.5 discount points on a $160,000 loan. What is the points fee?

  1. $4,000 (correct answer)
  2. $1,600
  3. $3,200
  4. $8,000
Explanation: Points fee = Loan Amount × Points = $160,000 × 0.025 = 4,000.ChoiceB(4,000. Choice B (1,600) calculates 1 point instead of 2.5. Choice C (3,200)calculates2pointsinsteadof2.5.ChoiceD(3,200) calculates 2 points instead of 2.5. Choice D (8,000) calculates 5 points instead of 2.5.

Question 8

What is the monthly interest payment on a $175,000 loan at 6.25% annual interest?

  1. $911.46 (correct answer)
  2. $875.00
  3. $1,093.75
  4. $729.17
Explanation: Monthly interest = ($175,000 × 0.0625) ÷ 12 = $10,937.50 ÷ 12 = 911.46.ChoiceB(911.46. Choice B (875) uses 6% rate instead of 6.25%. Choice C (1,093.75)calculatesannualinterestinsteadofmonthly.ChoiceD(1,093.75) calculates annual interest instead of monthly. Choice D (729.17) uses 5% rate instead of 6.25%.

Question 9

An investor's loan has a principal balance of $180,000 at 5.25% annual interest. What is the monthly interest payment for the first month?

  1. $787.50 represents the monthly interest portion only (correct answer)
  2. $945.00 represents the monthly interest portion only
  3. $787.50 represents the total monthly payment including principal
  4. $945.00 represents the total monthly payment including principal
Explanation: Monthly interest = ($180,000 × 0.0525) ÷ 12 = $9,450 ÷ 12 = $787.50. This is interest only, not the total payment which would include principal reduction.

Question 10

A borrower's current loan has a balance of $156,000 at 7.5% interest with payments of $1,089. If they refinance the full balance at 5.5% with the same payment amount, how much additional principal will be paid monthly?

  1. $260 (correct answer)
  2. $715
  3. $975
  4. $829
Explanation: Old interest = ($156,000 × 0.075) ÷ 12 = 975.Newinterest=(975. New interest = (156,000 × 0.055) ÷ 12 = $715. Additional principal = $975 - $715 = $260 per month goes to principal instead of interest.

Question 11

An amortizing loan has a principal balance of $225,000 with monthly payments of $1,347. If the interest rate is 4.75% annually, what portion of the first payment goes toward principal reduction?

  1. $456.25 goes toward principal with remaining amount covering interest charges
  2. $890.75 goes toward principal with remaining amount covering interest charges
  3. $456.25 goes toward interest with remaining amount covering principal reduction
  4. $890.75 goes toward interest with remaining amount covering principal reduction (correct answer)
Explanation: Monthly interest = ($225,000 × 0.0475) ÷ 12 = $890.75. Principal portion = $1,347 - $890.75 = $456.25. So $890.75 goes to interest and $456.25 to principal.

Question 12

A property is purchased for $365,000 with a $292,000 loan. What is the loan-to-value ratio?

  1. 80% (correct answer)
  2. 75%
  3. 85%
  4. 20%
Explanation: LTV = $292,000 ÷ $365,000 = 0.80 or 80%. Choice B (75%) uses incorrect calculation method. Choice C (85%) applies wrong percentage calculation. Choice D (20%) represents down payment percentage, not LTV.

Question 13

A loan balance is $150,000 at 5.25% annual interest. What is the interest payment for the first month?

  1. $656.25 (correct answer)
  2. $625.00
  3. $750.00
  4. $787.50
Explanation: Monthly interest = (Principal × Annual Rate) ÷ 12 = ($150,000 × 0.0525) ÷ 12 = $7,875 ÷ 12 = 656.25.ChoiceB(656.25. Choice B (625) uses 5% rate instead of 5.25%. Choice C (750)uses6750) uses 6% rate instead of 5.25%. Choice D (787.50) uses 6.3% rate instead of 5.25%.

Question 14

What is the cost of 1.75 discount points on a $268,000 loan?

  1. $4,690 (correct answer)
  2. $2,680
  3. $5,360
  4. $1,340
Explanation: Points cost = $268,000 × 0.0175 = 4,690.ChoiceB(4,690. Choice B (2,680) calculates 1 point instead of 1.75. Choice C (5,360)calculates2pointsinsteadof1.75.ChoiceD(5,360) calculates 2 points instead of 1.75. Choice D (1,340) calculates 0.5 points instead of 1.75.

Question 15

A borrower has a $200,000 loan at 5% annual interest. What is the monthly interest payment for the first month?

  1. $833.33 (correct answer)
  2. $1,000.00
  3. $10,000.00
  4. $416.67
Explanation: Monthly interest = (Principal × Annual Rate) ÷ 12 = ($200,000 × 0.05) ÷ 12 = $10,000 ÷ 12 = 833.33.ChoiceB(833.33. Choice B (1,000) uses 6% rate instead of 5%. Choice C (10,000)calculatesannualinterestinsteadofmonthly.ChoiceD(10,000) calculates annual interest instead of monthly. Choice D (416.67) uses 2.5% rate instead of 5%.

Question 16

A borrower makes a $45,000 down payment on a $225,000 property. What is the LTV?

  1. 80% (correct answer)
  2. 75%
  3. 85%
  4. 20%
Explanation: Loan amount = $225,000 - $45,000 = $180,000. LTV = $180,000 ÷ $225,000 = 0.80 or 80%. Choice B (75%) uses incorrect loan calculation. Choice C (85%) uses wrong down payment amount. Choice D (20%) represents down payment percentage, not LTV.

Question 17

A borrower has a loan with a current balance of $195,000 and wants to make an additional principal payment of $15,000. If the interest rate is 6.25%, how much will this save in the next month's interest?

  1. $78.125 reduction in next month's interest payment due to principal reduction (correct answer)
  2. $78.125 increase in next month's principal payment due to interest savings
  3. $1,015.625 reduction in next month's interest payment due to principal reduction
  4. $1,015.625 increase in next month's principal payment due to interest savings
Explanation: Interest savings = ($15,000 × 0.0625) ÷ 12 = $78.125. The additional principal payment reduces the balance, saving this amount in interest charges for the following month.

Question 18

If a lender requires a maximum 75% LTV on a $280,000 property, what is the maximum loan amount?

  1. $210,000 (correct answer)
  2. $224,000
  3. $238,000
  4. $70,000
Explanation: Maximum loan = $280,000 × 0.75 = 210,000.ChoiceB(210,000. Choice B (224,000) uses 80% LTV instead of 75%. Choice C (238,000)uses85238,000) uses 85% LTV instead of 75%. Choice D (70,000) calculates down payment amount instead of loan amount.

Question 19

A lender charges 2.25 discount points on a $425,000 loan, with each point reducing the rate by 0.1875%. If the base rate is 6.75%, what is the borrower's total upfront point cost?

  1. $9,562.50 (correct answer)
  2. $9,562.50
  3. $7,968.75
  4. $10,625.00
Explanation: Point cost = $425,000 × 0.0225 = $9,562.50. New rate = 6.75% - (2.25 × 0.1875%) = 6.328%.

Question 20

A couple finances $240,000 at 4.00% for 30 years; which option correctly defines an amortization schedule using numerical components?

  1. A statement of closing costs, including points, taxes, and title fees
  2. A chart showing only the property's market value changes each year
  3. A table listing each payment's interest (P×rP×r), principal (payment−interest), and remaining balance over 360 months (correct answer)
  4. A list of comparable sales used to estimate appraised value
Explanation: This question tests the application of loan calculations in real estate, focusing on LTV, interest, and amortization. Understanding these calculations is crucial for evaluating real estate investments and managing financial commitments. In this scenario, key details such as the loan amount, term, and interest rate guide the calculations for amortization schedule. The correct choice accurately reflects the calculated LTV ratio or payment amount, demonstrating the student's ability to apply formulas correctly. A common distractor may confuse with closing costs. To aid understanding, students should practice using standard formulas for LTV and amortization, and verify calculations with real-world examples. Encourage the use of financial calculators for accuracy.