California Real Estate Practice Exam

If a buyer secures a mortgage significantly below the prevailing rates, what does this allow them to do?

1. Pay less interest over the life of the loan

2. Purchase a more expensive property

3. Negotiate a better sale price

4. Avoid property taxes

The correct answer is: Purchase a more expensive property

Securing a mortgage significantly below the prevailing rates allows a buyer to purchase a more expensive property. This is because a lower mortgage rate means lower monthly payments, allowing the buyer to afford a higher-priced property. Option A is incorrect because although the buyer would pay less interest overall, this does not directly correlate to being able to purchase a more expensive property. Option C is incorrect as the sale price is negotiated before the mortgage is secured. Option D is also incorrect as property taxes are determined by the assessed value of the property, not the mortgage rate.