PRINCIPLES OF REAL ESTATE II EXAM SCRIPT 2025/2026
QUESTIONS WITH ANSWERS GUARANTEE A+
✔✔Annual Interest Formula (only works for non-amortized loans) - ✔✔Principal x
Interest rate = Annual interest
✔✔Jamie took out a straight loan of $200,000 with an interest rate of 4.5%. How much
will Jamie pay in annual interest? (non amortized) - ✔✔$200,000 x 4.5% = 9,000
(annual interest)
✔✔Monthly Interest Formula
For amortized, you solve annual interest then monthly interest
as principle is reduced or paid, the monthly interest changes - ✔✔Annual interest ÷ 12
(months) = Monthly Interest
✔✔Lauren has a remaining balance of $300,000 on her house. Her interest rate is
4.15%. How much interest does Lauren owe for her next mortgage payment? -
✔✔$300,000 x 0.0415 = $12,450 annual interest
$12,450 ÷ 12 = $1,037.50
✔✔If Greta has an annual interest total of $24,000, how much is her monthly interest
payment? - ✔✔24,000/12= 2000
✔✔formula for quarterly interest - ✔✔Annual interest ÷ 4 = Quarterly interest
✔✔Lauren has a remaining balance of $300,000 on her house. Her interest rate is
4.15%. The annual interest is $12,450. - ✔✔$300,000 x 0.0415 = $12,450 annual
interest
$12,450 ÷ 4 = $3,112.50 quarterly interest
✔✔Annual and Monthly Interest - ✔✔(Monthly interest x 3) + Annual interest = 15 month
interest
Alternatively, you could also find the monthly interest and then multiply that number by
the number of months for which you need to find the interest.
✔✔In an amortized loan, the monthly interest payment is always based on: - ✔✔the
remaining principal
✔✔Why is it good for a borrower to make larger mortgage payments if they can? - ✔✔it
will decrease the amount of money they will in interest.
, ✔✔Over the course of an amortized loan's life, the borrower's payments will increasingly
be allocated towards interest payments. - ✔✔False
✔✔Let's work out some of Jimmy's math. As you might recall, Jimmy has a 30-year,
$300,000 mortgage with a 4.25% interest rate. His monthly payment is $1,476.
The steps below will show you how you can figure out how much of a monthly payment
will go towards the principal and how much will go towards interest. - ✔✔4.25% x
$300,000 ÷ 12 = 1063 (goes toward interest)
$1,476 - $1,063 = $413 (goes toward principal)
✔✔Finding Jimmy's Second Payment - ✔✔$300,000 - $413 = $299,587 (month 2
balance)
(4.25% x $299,587) ÷ 12 = $1,060 (month 2 interest portion of payment)
$1,476 - $1,061 = $415 (month 2 principal portion of payment)
✔✔Which of these explains why the amount of money that goes towards interest
decreases after each payment? - ✔✔because the interest payment is always based on
the current principal balance
✔✔Solving for Total Interest Paid - ✔✔Monthly payment x Number of payments = Total
loan cost
Total loan cost - Original loan principal = Total interest paid
✔✔Math Practice: Savannah's Total Interest Payment
Let's look at another example. Savannah took out a $300,000, 30-year amortized loan.
Her monthly payment is $1,500.
How much will she end up paying in interest after the 30 years of paying the loan? -
✔✔$1,500 x 360 months (30 years) = $540,000 (total loan cost)
$540,000 - $300,000 = $240,000 (interest paid over life of the loan)
✔✔Barry took out a $400,000 30-year mortgage. After 30 years, Barry paid a total of
$730,000 to the lender. How much did Barry pay in interest over the life of the loan? -
✔✔$730,000- $400,000 = $330,000
✔✔comparing mortgages
QUESTIONS WITH ANSWERS GUARANTEE A+
✔✔Annual Interest Formula (only works for non-amortized loans) - ✔✔Principal x
Interest rate = Annual interest
✔✔Jamie took out a straight loan of $200,000 with an interest rate of 4.5%. How much
will Jamie pay in annual interest? (non amortized) - ✔✔$200,000 x 4.5% = 9,000
(annual interest)
✔✔Monthly Interest Formula
For amortized, you solve annual interest then monthly interest
as principle is reduced or paid, the monthly interest changes - ✔✔Annual interest ÷ 12
(months) = Monthly Interest
✔✔Lauren has a remaining balance of $300,000 on her house. Her interest rate is
4.15%. How much interest does Lauren owe for her next mortgage payment? -
✔✔$300,000 x 0.0415 = $12,450 annual interest
$12,450 ÷ 12 = $1,037.50
✔✔If Greta has an annual interest total of $24,000, how much is her monthly interest
payment? - ✔✔24,000/12= 2000
✔✔formula for quarterly interest - ✔✔Annual interest ÷ 4 = Quarterly interest
✔✔Lauren has a remaining balance of $300,000 on her house. Her interest rate is
4.15%. The annual interest is $12,450. - ✔✔$300,000 x 0.0415 = $12,450 annual
interest
$12,450 ÷ 4 = $3,112.50 quarterly interest
✔✔Annual and Monthly Interest - ✔✔(Monthly interest x 3) + Annual interest = 15 month
interest
Alternatively, you could also find the monthly interest and then multiply that number by
the number of months for which you need to find the interest.
✔✔In an amortized loan, the monthly interest payment is always based on: - ✔✔the
remaining principal
✔✔Why is it good for a borrower to make larger mortgage payments if they can? - ✔✔it
will decrease the amount of money they will in interest.
, ✔✔Over the course of an amortized loan's life, the borrower's payments will increasingly
be allocated towards interest payments. - ✔✔False
✔✔Let's work out some of Jimmy's math. As you might recall, Jimmy has a 30-year,
$300,000 mortgage with a 4.25% interest rate. His monthly payment is $1,476.
The steps below will show you how you can figure out how much of a monthly payment
will go towards the principal and how much will go towards interest. - ✔✔4.25% x
$300,000 ÷ 12 = 1063 (goes toward interest)
$1,476 - $1,063 = $413 (goes toward principal)
✔✔Finding Jimmy's Second Payment - ✔✔$300,000 - $413 = $299,587 (month 2
balance)
(4.25% x $299,587) ÷ 12 = $1,060 (month 2 interest portion of payment)
$1,476 - $1,061 = $415 (month 2 principal portion of payment)
✔✔Which of these explains why the amount of money that goes towards interest
decreases after each payment? - ✔✔because the interest payment is always based on
the current principal balance
✔✔Solving for Total Interest Paid - ✔✔Monthly payment x Number of payments = Total
loan cost
Total loan cost - Original loan principal = Total interest paid
✔✔Math Practice: Savannah's Total Interest Payment
Let's look at another example. Savannah took out a $300,000, 30-year amortized loan.
Her monthly payment is $1,500.
How much will she end up paying in interest after the 30 years of paying the loan? -
✔✔$1,500 x 360 months (30 years) = $540,000 (total loan cost)
$540,000 - $300,000 = $240,000 (interest paid over life of the loan)
✔✔Barry took out a $400,000 30-year mortgage. After 30 years, Barry paid a total of
$730,000 to the lender. How much did Barry pay in interest over the life of the loan? -
✔✔$730,000- $400,000 = $330,000
✔✔comparing mortgages
