California Real Estate Practice Exam

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Study for the California Real Estate Exam. Engage with multiple choice questions and detailed explanations to sharpen your knowledge. Get ready to ace your real estate career!

Practice this question and more.

How much interest will a home buyer pay in the first year on a $280,000 loan at a 7% interest rate?

$19,600
$20,000
$18,500
$21,000

The correct answer is: $19,600

The correct answer is A $19,600. This is because in the first year, you will pay 7% of the loan amount in interest, which is $280,000 x 0.07 = $19,600. The other options are incorrect because they are either too high or too low. Option B is close, but it assumes that the interest rate is calculated on the principle amount without taking into account the decrease in balance as you make payments. Option C is too low because it assumes a lower interest rate. Option D is too high because it assumes a higher interest rate. Therefore, the correct answer is A.