Real Estate Finance Exam Bundle Questions with solved Answers

Character, Credit Score, Capacity, Capitol, and Collateral-ANSWER-What do creditors use to approve loans? Par Loan-ANSWER-A loan that is made at the current market rate of interest. Origination-ANSWER-The process of creating a new mortgage loan, including all steps taken by a lender, to attrac...

Mortgage - ANSWER-A pledge of real property as security for a debt. Deed of Trust - ANSWER-A three party loan instrument - borrower, lender and trustee. Note, Promissory Note - ANSWER-A personal promise to repay a debt. Mortgagor - ANSWER-Borrower under a mortgage Mortgagee - ANSWER-Lend...

A __________ is a permanent change in one or more of the terms of a borrower's loan. Loan Qualification Loan Modification Loan Approval Loan Origination - ANSWER-Loan Modification What time period must borrowers have in job history with the same employer to qualify? 2 months 6 mo...

The process of creating a new mortgage loan, including all steps taken by a lender to attract and qualify a borrower are _____. - ANSWER-Origination activities The process of evaluating a borrower's loan application to determine the risk involved for the lender is - ANSWER-Underwriting Which ...

if you are holding undeveloped land, your goal as an investment is: - ANSWER-appreciation land is referred to as _____ because it can be seen touched - ANSWER-tangible Formaldehyde gas is: - ANSWER-Colorless Local governments can use which of the following to enforce subdivision requirement...

Three of the major credit data repositories: - ANSWER-Experian, Equifax, TransUnion The process of creating a new mortgage loan: - ANSWER-Origination Loan application to determine the risk involved for lender is defined as: - ANSWER-Underwriting Fiscal policy, which is related to Federal Go...

lenders bear less risk in making an FHA loan beacuse the FHA - ANSWER-FHA is default insurance that will pay a claim to a lender in the event of a default by the homeowner portfolio loan - ANSWER-retained by the lender and it is not sold in the secondary market. commercial banks are active in res...

Define Origination - ANSWER-THE PROCESS OF CREATING A NEW LOAN, INCLUDING ALL STEPS TAKEN BY THE LENDER TO ATTRACT AND QUALIFY A BORROWER. Define mortgage broker - ANSWER-MORTGAGE BROKERS WORK AS THE MIDDLEMAN, BRINGING THE LENDER AND THE BORROWER TOGETHER IN A LOAN PROGRAM THAT MEETS THE BORROWE...

__________ is the consummation of a contractual real estate transaction in which all appropriate documents are signed, and the mortgage loan proceeds are disbursed by the lender. a. Servicing b. Underwriting c. Funding d. Closing - ANSWER-D The primary determinants of real estate values are s...

Loan processing - ANSWER-The process of collecting information about a borrower in order to build a loan file that will be used to make an underwriting decision. Underwriting - ANSWER-The process of evaluating a borrower's loan application to determine the risk involved for the lender. Fundin...

ORIGINATION - ANSWER-THE PROCESS OF CREATING A NEW LOAN, INCLUDING ALL STEPS TAKEN BY THE LENDER TO ATTRACT AND QUALIFY A BORROWER. MORTGAGE BROKERS - ANSWER-HE MIDDLEMAN, BRINGING THE LENDER AND THE BORROWER TOGETHER IN A LOAN PROGRAM THAT MEETS THE BORROWER'S NEEDS MORTGAGE BANKERS - ANSWER...

Default of contract and types of damages - ANSWER--In the event of default by the buyer, the seller may have several options, which include: -Liquidated damages. The seller can choose to accept the buyer's earnest money as liquidated damages, releasing all parties from any further obligation under...

Mortgage Loans -ANSWER-Most common choice for financing real property. Can be conventional or non-conventional Conventional Loan -ANSWER-Neither federally insured nor guaranteed Non-conventional Loan -ANSWER-Federally insured/guaranteed mortgage loans to encourage ownership (FHA, VA, USDA) ...

The science that describes the management, creation, and study of money, banking, credit, investments, assets, and liabilities is - ANSWER-Finance Most real estate cycles in Texas are determined by: - ANSWER-Supply and demand __________________ measure(s) the wealth and resources of a particu...

INTEREST - ANSWER-1=PRT (PRINCIPAL X RATE X TIME= INTEREST) Sales price $175,000, LTV is 85%, Interest rate is 4.75%, 30 year term. Closing date is Aug 20. How much interest is paid the first full month? - ANSWER-$588.80 Loan Amt $167,300, Factor is $5.07. Annual tax is $2,750, Annual Insuranc...

Which of the following is chattel? A. Detached garage B. Attached satellite dish owned by the seller C. Washer/Dryer D. In ground pool - ANSWER-C. Washer/Dryer Which of the following allows for unequal shares of ownership? A. Tenants in common B. Joint Tenancy C. Tenancy by the entirety ...

hypothication - ANSWER-bank giving you right to live in a house while you're paying for it title theory - ANSWER-live in it but don't own till paid off lien theory - ANSWER-owner while paying but bank has lien default - ANSWER-broke a promise, failure to comply with terms & conditions of ...

origination - ANSWER-process of creating a new mortgage loan funding - ANSWER-The process of transferring funds to a title or escrow company for disbursement underwriting - ANSWER-process of evaluating a borrowers loan application to determine the risk involved for the lender servicing - AN...

What is fiat money? - ANSWER-currency that is not backed by any precious metals . At the treasury level, funds can be raised to pay for government spending by increasing borrowing and _________. - ANSWER-raising taxes The ____________ is the interest rate a reserve bank charges eligible financ...

Usury is: - ANSWER-an interest payment in excess of the legally permitted rate. A fiduciary is: - ANSWER-a person who has a financial trust. A bond is a(n): - ANSWER-debt instrument. The highest legal form of property ownership is: - ANSWER-fee simple estate. A payment of principal at th...

When the supply of real estate exceeds the demand for real estate, what happens to price? - ANSWER-decreases What do lenders NOT consider when qualifying a buyer for a loan? - ANSWER-number of children Which of the following statements about property tax exemptions is TRUE? - ANSWER-they decre...

3 major credit reporting agencies - ANSWER-Experian, Equifax, TransUnion Origination - ANSWER-Process of creating a new mortgage loan, including all steps by a lender to attract and qualify a borrower. Loan Processing - ANSWER-Building a file that will be used to make an underwriting decision ...

APPRAISAL - ANSWER-AN OPINION OF VALUE THE LOAN-TO-VALUE RATIO (LTV) - ANSWER-IS THE PERCENTAGE OF THE APPRAISED VALUE OR THE SALES PRICE THAT A LENDER IS WILLING TO FINANCE FOR A BORROWER. THE LENDER WILL BASE THE LOAN TO VALUE ON THE LOWER OF THE SALES PRICE OR THE APPRAISED VALUE. - ANSWER-...

What does D.U.S.T. stand for? - ANSWER-Demand, Utility, Scarcity, Transferability the percentage of value or sales price that a lender is willing to finance - ANSWER-Loan to Value Ratio (LTV) the value of a property is equal to the sum of the contributory value of each of its component parts. ...

Closing - ANSWER-_____ is the consummation of a contractual real estate transaction in which all appropriate documents are signed, and the mortgage loan proceeds are disbursed by the lender. Demand - ANSWER-The primary determinants of real estate values are supply and _____. Collateral - ANSWE...

Mortgage - ANSWER-The document that pledges property as collateral for a loan is called a __________________. Mortgagor - ANSWER-One who gives the mortgage to the lender is the ________________. Mortgagee - ANSWER-One who receives the mortgage (the lender) is the _______________. Trustee - ...

Which of the following default types would be considered a technical default? - ANSWER-failure to keep property in good repair Which Texas agency licenses, regulates, and examines the trust- and insurance-funded prepaid funeral contract sellers? - ANSWER-TExas department of banking The Tax Ref...

Investment Value - ANSWER-Maximum price an investor is willing to pay for ownership (or debt) interest in real property. Real estate valuation - ANSWER-Estimate all future net cash flows Convert into estimate of present value. How are investment decisions made? - ANSWER-By comparing estimate ...

The process of collecting information about a borrower in order to build a loan file that will be used to make an underwriting decisions. - ANSWER-loan processing The process of evaluating a borrower's loan application to determine the risk involved for the lender. - ANSWER-underwriting T...

market - ANSWER-The most significant type of value for real estate licensees is ____________ value. Market value - ANSWER-________________ is defined as the price a willing seller will sell for, and the price a willing buyer will pay, when neither is acting under exceptional pressure. Market ...

Sending monthly payment statements and collecting monthly payments, maintaining payment records and following up on delinquencies. a. Loan processing b. funding c. Servicing d. Origination - ANSWER-C. Servicing The process of creating a new mortgage loan. a. Underwriting b. Loan proce...

Appraisal - ANSWER-An Appraiser's opinion of value Principle of conformity - ANSWER-Suggests that value is maximized when there is reasonable degree of homogeneity, or sameness, in a neighborhood USPAP - ANSWER-Uniform Standards of Professional Appraisal Practice Uniform Standards of Profe...

What is fiat money? (a) Currency that is not backed by any precious metals. (b) Currency backed by silver and gold. (c) Currency backed by gold only. (d) Currency backed by platinum. - ANSWER-a Congress created the Federal Housing Administration in . a. 1949 b. 1939 c. 1...

Why do lenders collect reserve funds at the property closing? A) To get a higher yield in their investment B) To be sure money will be available for tax and insurance purposes C) To have extra money that will accrue interest D) To hedge against increases in taxes or insurance premiums - ANSWER...

Which of the following is CHATTEL -ANSWER-A. Detached garage B. Attached satellite dish owned by the seller. C. WASHER/DRYER - CORRECT D. In-ground pool Allows for unequal shares of ownership. -ANSWER-A. TENANTS IN COMMON - CORRECT B. Joint Tenancy C. Tenancy by the entirety D. Freehold es...

John owns the dominant estate with an easement appurtenant. John sells the property. What happens to the easement? - ANSWER-It belongs to the buyer. A commercial tenant's lease will expire at the end of this month. He is currently in the process of removing his display cases from the shop. What ...

Buyer Representation Agreement - ANSWER-An employment contract obligating a broker to act as a fiduciary to a buyer Implied Agency - ANSWER-Agency as a result of customary, usual or typical conditions Broker - ANSWER-A properly licensed party who serves a principal in an agency relationship- a...

appraised value - ANSWER-An opinion of value Loan-to-Value Ratio - ANSWER-the maximum percentage of the value of a property that the lender is willing to loan An appraisal that is less that the sales price will generally result in what 3 ways? - ANSWER-1) Termination of the Transaction 2) Re...

In ______ the Texas Real Estate Commission was established to administer and enforce the TRELA. - ANSWER-1949 TREC has only _______ promulgated lease forms. - ANSWER-2 In the TAR® Seller's Disclosure the seller should _______. a. prepare the disclosure when the listing is taken b. be th...

Brokerage -ANSWER-The aspect of the real estate business that pertains to overseeing the needs of the parties and completing a transaction Property Managers are generally responsible for the following -ANSWER-Day to Day operations, Maintenance and Tenant Relations RMLO -ANSWER-Mortgage Brokers...

appraisal - ANSWER-value of a property maybe affected by social, economic, govt and environmental influences Loan-to-Value Ratio (LTV) - ANSWER-The percentage of value or sales price that a lender is willing to finance. limited appraisal report - ANSWER-exterior only/drive by inspection. deeme...

appraisal - ANSWER-appraisers opinion of value principal of contribution - ANSWER-the value if the property is equal to the sum if the contributory value of each of its component parts. loan to value ratio - ANSWER-percentage of value or sales price that a lender is willing to finance. desk...

Appraisal - ANSWER-an appraiser's opinion of value Loan to Value (LTV) - ANSWER-the percentage of an asset's market value that a lender is willing to finance Principle of Contribution - ANSWER-value of a part is determined by its contribution to the total value of the property rather than by...

appurtenance - ANSWER-term used to describe rights, privileges or improvements that belong to and pass with the land improvements - ANSWER-man's additions to the land such as building and landscaping personal property - ANSWER-also called chattel or personalty; a right or interest in smiting ...

Functional obsolescence - ANSWER-Refers to the loss in desirability of the style, layout, or function of an element of a property over time. Sales Comparison - ANSWER-The approach used as the best indicator of value for existing properties. External obsolescence - ANSWER-The loss in value o...

appraisal - ANSWER-defined as an appraiser's opinion of value. Loan-to-Value Ratio (LTV) - ANSWER-is the percentage of value or sales price that a lender is willing to finance. Principle of Substitution - ANSWER-According to this principle, a commodity's value is influenced by the cost of ac...

Congress created the Federal Housing Administration in ___________. a. 1949 b. 1939 c. 1984 d. 1934 - ANSWER-(d) 1934 In order to qualify for exemption from capital gains, the property must have been the primary residence for two of the previous _____ years. a. 6 b. 3 c. 5 d. 4 - ANSW...

What contract form would you use if you're an agent selling a townhome - ANSWER-1-4 family What type of transaction are TRECS contract promulgated forms used for - ANSWER-Residential Who are buyers supposed to hire for inspections - ANSWER-TREC licensed Inspectors What % does the lender re...

d - ANSWER-Congress created the Federal Housing Administration in ______. (a) 1949 (b) 1939 (c) 1984 (d) 1934 c - ANSWER-In order to qualify for exemption from capital gains, the property must have been the primary residence for two of the previous _____ years. (a) 6 (b) 3 (c) 5...

restraint on alienation - ANSWER-Mortgage law prohibits enforcement of any trust deed provision which purports to restrict the owner's right to sell, lease or encumber their property, called a: due-on - ANSWER-Garn-St. Germain Federal Depository Institutions Act of 1982 (Garn) provides general g...

rita & henry have been told that the monthly payment of PITI on the home that they have selected to purchase is $1507. if area lender are qualifying at 28%, what gross monthly income must they show to qualify? - ANSWER-PITI $1507/month qualifying ratio 28% $1507 / 28% = $5382.14 $5382.14 i...

Statutory - ANSWER-Text lien can be classified as a involuntary lien and a ________lien Encumbrance - ANSWER-And easement for ingress and egress is known as a________ Voluntary lien - ANSWER-Which of the following types of liens is one that is freely given usually as collateral for a loan W...

Functional obsolescence - ANSWER-Refers to the loss in desirability of the style, layout or function of an element of a property over time Sales comparison - ANSWER-best indicator of value for existing properties highest and best use - ANSWER-the legal use for property that gives the greatest ...

Appraisal - ANSWER-an appraiser's opinion of value, used to determine market value property to secure the loan Loan to Value Ratio - ANSWER-Percentage of value or sales price that a lender is willing to finance Desk Review - ANSWER-an appraisal that simply reviews a checklist of items as they...

Sending monthly payment statements and collecting monthly payments, maintaining payment records and following up on delinquencies - ANSWER-Servicing The process of creating a new mortgage loan - ANSWER-Origination The process of collecting information about a borrower in order to build a loan ...

GRADUATED PAYMENT MORTGAGE (GPM) - ANSWER-monthly payment for principal interest gradually increases by certain percentage each year for certain number of years and then it levels off of the remaining term of the mortgage. GPM loan buyer may have initial payments less than the interest only portion ...

Congress created the Federal Housing Administration in ______. (a) 1949 (b) 1939 (c) 1984 (d) 1934 - ANSWER-D In order to qualify for exemption from capital gains, the property must have been the primary residence for two of the previous _____ years. - ANSWER-5 years A loan with no discoun...

Functional obsolescence - ANSWER-Refers to the loss in desirability of the style, layout. or function of an element of a property over time Sales Comparison - ANSWER-the approach used as the best indicator of value for existing properties Highest and best use - ANSWER-the legal use for propert...

Through which Avenue does the US treasury promote economic growth - ANSWER-Policies that support job creation Which of the following is not a function of the department of the treasury - ANSWER-Campaign-finance reform According to the text payer bill of rights taxpayers have all of these right...

Through which Avenue does the US treasury promote economic growth - ANSWER-Policies that support job creation Which of the following is not a function of the department of the treasury - ANSWER-Campaign-finance reform According to the text payer bill of rights taxpayers have all of these right...

What contract form would you use if you're an agent selling a townhome - ANSWER-1-4 family What type of transaction are TRECS contract promulgated forms used for - ANSWER-Residential Who are buyers supposed to hire for inspections - ANSWER-TREC licensed Inspectors What % does the lender re...

Loan to Value Ratio - ANSWER-The percentage of value or sales price that a lender is willing to finance. Desk Review - ANSWER-For Conforming loans, simple desk reviews, normally at their desks. Field Review - ANSWER-When dealing with High-LTV loans will hire a third party appraiser to review t...

appraisal - ANSWER--an appraiser's opinion of value -lenders use this to determine market value of property being used to secure the loan highest and best use - ANSWER-legal use for property that gives greatest return in money and/or amenities principle of contribution - ANSWER-property's v...

VA Loan Requirements - ANSWER-- must be honorably discharged - must meet service requirements - time frame of service; number of days active duty - must obtain certificate of eligibility (COE) Loan Terminology - origination, funding, underwriting, servicing - ANSWER-1) Origination - process of...

Civil Rights Act of 1866 - ANSWER-Prohibited discrimination in housing based on race or color Civil Rights Act of 1968 - ANSWER-prohibits discrimination based on race, color, religion, and national origin Steering - ANSWER-taking buyers or renters to or away from a particular area based on rac...

Methods of Financing - ANSWER-Mortgage loans are the most common choice for financing real property. Mortgage loans fall into two broad categories - conventional and non-conventional loans. Conventional Loan - ANSWER-A loan that is neither federally insured nor guaranteed - a private sector loan....