Promissory Note Math for the Real Estate License Exam

In today’s episode of “Spruce Answers”your real estate license prep test questions we have a quick one. It reads “Using the services of a mortgage broker, a buyer borrowed $25,000 from a private lender. After the loan costs were deducted, the buyer received $24,255. What is the face value of the note? (Promissory Note)”

Ok here’s another one based on a concept more than actual math. The concept being tested on is do you know what a note is?


Flashback to the promissory note mentioned in the financing unit.

Flashback to the promissory note mentioned in the financing unit.

promissory note definition

OK, so the definition reads “a signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on demand.”

So let’s examine the mystery here. Now that we know what a note is can we break this down? The question states…. “, a buyer borrowed $25,000 from a private lender. After the loan costs were deducted, the buyer received $24,255. What is the face value of the note?”


Well think about this in real life

If you borrowed $25,000 would you owe $25,000  or something less than that? Of course you don’t owe less than that, you’d owe the full $25,000. It doesn’t matter the crazy fees that were taken out of the amount prior to you getting the money. So the question states that the buyer received $24,255 (which is the figure thrown in there to make you feel like you’re crazy and has nothing to do with anything) Because the definition of a note is “a written promise to pay a stated sum” NOT WHAT THE PERSON WAS HANDED AFTER FEES. So it’s honestly that simple. The question asks “What is the face value of the note?” and that’s it. Done deal. The FACE value of the note is ….. drum roll $25,000.

Ok, now that you’ve seen the breakdown of this, did you like it’s simple explanation? If so, I think you’ve probably stumbled upon the best resource for your WV real estate license prep, Spruce School of Real Estate. Did you know that Spruce has been teaching online classes for real estate license prep in WV for close to 10 years now and has been teaching IN class for over 25 years! Spruce was the FIRST school native to WV to be approved to teach online in our home state by the West Virginia Real Estate Commission and ARELLO. That says a LOT when you think that they’ve been around to learn the best delivery methods in the fast paces world of online classes!

If you’d like to find out more info on Spruce you can find answers on their home page or feel free to reach out on their Facebook site here.