Exam (elaborations)
PA REAL ESTATE EXAM PREP QUESTIONS AND ANSWERS
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PA REAL ESTATE EXAM PREP QUESTIONS AND ANSWERS
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PA REAL ESTATE EXAM PREP QUESTIONS ANDANSWERS
Which of the following describes the term "appreciation"?
A. Kind words expressed to someone about something they did
B. An increase in the value of property
C. An item of value owned by an individual
D. None of the above - Answers -B. Appreciation is the increase in the value of a
property due to changes in market conditions, inflation, or other causes.
When ownership of a mortgage is transferred from one company or individual to
another, it is called
A. an assumption
B. an assignment
C. an assessment
D. all of the above - Answers -B. When ownership of a mortgage is transferred
(assigned) from one company or individual to another, it is called an assignment.
A mortgage loan which requires the remaining balance be paid at a specific point in time
is called a/an
A. balloon mortgage
B. early due mortgage
C. mortgage of convenience
D. promissory note - Answers -A. A mortgage loan that requires the remaining principal
balance be paid at a specific point in time is a balloon mortgage.
The following reason accounts for why bridge loans are not used much anymore:
A. More second mortgage lenders now will lend at a high loan to value
B. Sellers would rather accept offers from Buyers who have already sold their property
C. Neither A or B
D. Both A and B - Answers -D. Bridge loans are not used much anymore because more
second mortgage lenders now will lend at a high loan to value and sellers often prefer to
accept offers from buyers who have already sold their property.
A title which is free of liens or legal questions as to ownership of the property is called a
__________ title.
A. good
B. cloudy
C. clear
D. free - Answers -Answer: C. A title free of liens or legal questions as to ownership of
the property is called a clear title. It is clear because there can be no challenges made
to its legality.
What does a power of attorney grant someone? A. The ability to attend law school B.
Complete or limited authority on behalf of someone else C. Complete control over which
,medical facility someone uses D. The right to inherit an estate - Answers -Answer: B. A
power of attorney derives power from a legal document and grants someone complete
or limited authority on behalf of someone.
The principal is A. the amount borrowed or remaining unpaid B. part of the monthly
payment that reduces the remaining balance of a mortgage C. an ethic or value D. both
A and B - Answers -D. The principal is the amount borrowed or remaining unpaid, as
well as the part of the monthly payment that reduces the remaining balance of a
mortgage.
A promissory note is A. a written promise to repay a specified amount over a specified
period of time B. an oral promise to repay a specified amount over a specified period of
time C. a note passed back and forth in class D. a note you deliver to another telling
them of your intentions - Answers -A. A promissory note is a written promise to repay a
specific amount over a specified period of time.
Which of the following best describes a real estate agent? A. A licensed person who
negotiates and transacts the sale of real estate B. The owner of a real estate firm C. A
person who negotiates and transacts the sale of real estate but is not licensed D. A
person who sells both property and insurance - Answers -A. A real estate agent is a
licensed person who negotiates and transacts the sale of real estate.
When does an assumption take place? A. When someone believes something and it
turns out to be true B. When the buyer assumes the seller's mortgage C. When the
seller assumes the buyer's mortgage D. All of the above - Answers -B. When the buyer
assumes the seller's mortgage is a transaction called an assumption.
A legal document conveying title to a property is called a/an A. sales contract B. option
to purchase C. deed D. contract for deed - Answers -C. A deed is a legal document
conveying title to property.
If you have a loan and transfer the title to another individual without informing the
lender, it is likely that the lender will demand payment of the outstanding loan balance.
He is able to do this because of a clause in your mortgage called the A. due on demand
clause B. acceleration clause C. amortization schedule D. both A and B - Answers -B.
An acceleration clause allows the lender to demand payment, most commonly if the
borrower defaults on the loan or transfers title to someone without informing the lender.
The most common type of bankruptcy is called A. Chapter 11 bankruptcy B. Chapter 11
no asset bankruptcy C. Chapter 7 no asset bankruptcy D. Chapter 7 bankruptcy -
Answers -C. The most common type for an individual is a "Chapter 7 No Asset"
bankruptcy, which relieves the borrower of most types of debts.
Which of the following best describes a "broker"? A. Someone who owns a real estate
firm B. Some real estate agents working for brokers C. Someone who acts as an agent
and brings two parties together for a transaction and earns a fee for this D. All of the
,above - Answers -D. A broker can own a real estate firm, work for another broker who
owns the firm, broker loans in the mortgage industry, but basically is defined as anyone
who acts as an agent, bringing two parties together for any type of transaction and
earns a fee.
A normal contingency in a real estate contract would be that the A. purchaser is able to
obtain a satisfactory home inspection from a qualified inspector. B. seller is allowed to
come back and spend 2 weeks in the house each year C. purchaser is able to have
occupancy as soon as the sales contract is signed D. seller is allowed to dig up some of
the landscaping and take it with him - Answers -A. A normal contingency in a sales
contract would be that the purchaser is able to obtain a satisfactory home inspection
from a qualified inspector. This condition has to be met before the contract is legally
binding.
If you go to a bank or mortgage company to apply for a home, what type of mortgage
would you be applying for? A. Government B. Conventional C. American D. Adjustable
rate - Answers -B. Home loans which are not VA or FHA are called conventional loans.
A report of someone's credit history which is prepared by a credit bureau and used by a
lender in the loan qualification process is called a A. personal affidavit B. credit card
history C. savings account history D. credit report - Answers -D. A report of an
individual's credit prepared by a credit bureau and used by a lender in determining a
loan applicant's creditworthiness is called a credit report.
If you have not made your mortgage payment within 30 days of the due date, the
mortgage is considered to be in A. arrears B. default C. trouble D. bankruptcy - Answers
-B. Failure to make the mortgage payment within a specified period of time, usually 30
days for first mortgages or first trust deeds, causes the loan to be in default.
A term used by appraisers to estimate the physical condition of a building. It may be
different from the building's actual age. A. Estimated age B. Longevity C. Preferred age
D. Effective age - Answers -D. An appraiser's estimate of the physical condition of a
building is called effective age. Its actual age may be shorter or longer than the effective
age.
The difference between the fair market value of a property and the amount still owed on
the mortgage and other liens is the owner's financial interest in the property and is
called his A. equity B. balance due C. indebtedness D. none of the above - Answers -A.
A homeowner's financial interest in a property is called his equity. It is the difference
between fair market value and what is still owed on the mortgage and any other liens.
What is the collateral in a home loan?
A. The property itself
B. A person's good name
C. The amount of savings a person has
, D. The current automobile the person owns - Answers -Answer: A. The property itself is
the collateral, and the borrower risks losing it if he does not repay according to the
terms of the mortgage or deed of trust.
The adjustment date on an adjustable-rate mortgage is
A. the date the interest rate changes
B. the date the stock market goes up
C. 30 days from the date the mortgage was taken out
D. all of the above - Answers -A. The adjustment date is the date the interest rate
changes (adjusts).
What is the deposit made by a potential buyer to show he is serious about buying a
house called?
A. Serious money deposit
B. Earnest money deposit
C. "Nothing ventured, nothing gained" deposit
D. Down payment - Answers -B. The deposit made by a potential buyer to show they
are in earnest about purchasing a house is called an earnest money deposit.
A right-of-way which gives persons other than the owner access to or over a property is
known as an
A. easement
B. ingress
C. egress
D. none of the above - Answers -A. An easement is a right-of-way to persons other than
the owner and gives them legal access.
Which best describes a "subdivision"?
A. Houses in the same neighborhood similar in style and size
B. A housing development created by dividing a tract of land into individual lots
C. A development which is "substandard"
D. None of the above - Answers -B. A subdivision consists of individual lots created
from a larger tract (subdivided) and are offered for sale or lease.
When someone contributes to the construction or rehabilitation of a property with labor
or services rather than cash, that contribution is called A. a personal contribution B.
sweat equity C. a big help to the contractors D. toil and labor - Answers -B. Sweat
equity is the contribution to the construction of or rehabilitation of a property in the form
of labor or services rather than cash.
A two-step mortgage is defined as A. an adjustable rate mortgage with one interest rate
for the first five or seven years and a different rate for the remainder of the term. B. a
mortgage which is both adjustable and fixed C. a mortgage which is named after a
dance step D. all of the above - Answers -A. A two-step mortgage starts out with one
rate for the first five or seven years and then changes to a different rate for the
remainder of the term of the mortgage amortization.
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