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Michigan Real Estate Prep > Real Estate Vocabulary Exam > Flashcards

Real Estate Vocabulary Exam Flashcards

1
Q

_____ is the increase in the value of a property due to changes in the value of a property due to changes in market conditions, inflation, or other causes

A

Appreciation

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2
Q

When a mortgage is transferred from one company or individual to another it is called ____?

A

Assignment

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3
Q

A _____ mortgage loan that requires the remaining principal balance be paid at a specific point in time.

A

Balloon Mortgage

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4
Q

Name two reasons why bridge loans are not used much anymore.

A
  1. More second mortgage lenders now will lend at a high loan to value
  2. Sellers would rather accept offers from buyers who have already sold their property.
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5
Q

____ is a title free of liens or legal questions as to ownership of the property.

A

Clear Title

It is clear because there can be no challenges made to its legality.

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6
Q

What is the collateral in a home loan and why?

A

The property itself because;

the borrower risks losing it if he does not repay according to the terms of the mortgage or deed of trust.

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7
Q

What is the adjustment rate date on an adjustable-rate mortgage?

A

The date the interest rate changes

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8
Q

_____ is the kind of deposit made by a potential buyer to show he is serious about buying a house.

A

Earnest Money Deposit

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9
Q

A ___ is a right-of-way that gives persons other than the owner legal access to or over a property.

A

Easement

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10
Q

What is the definition of a “sub-division”

A

A housing development created by dividing a tract o land into individual lots offered for sale or lease.

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11
Q

______ Equity is the contribution to the construction of or rehabilitation of a property in the form of labor or services rather than cash.

A

Sweat Equity

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12
Q

What is the definition of a two step mortgage?

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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13
Q

__ is a legal document evidencing a person’s right to or ownership of a property.

A

Title

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14
Q

______ is a written document that transfers personal property from one owner to another.

A

Bill of Sale

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15
Q

a _____ is an oral or written agreement that is binding in a court of law

A

Contract

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16
Q

A ____ is a purchase price of a property that the buyer pays in cash and does not finance with the mortgage.

Usually given in cash at the time of finalizing the transaction.

A

Down Payment

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17
Q

_____ is a female named in a will to administer an estate.

A

Executrix

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18
Q

_____ is the greatest possible interest a person can have in real estate

A

Fee Simple

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19
Q

_____ is required in federally designated flood areas and does compensate for physical property damage resulting from flooding.

A

Flood Insurance

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20
Q

What is true about government loans?

A

They are either insured by FHA, guaranteed by the Department of Veterans Affairs (VA), or guaranteed by the Rural Housing Service (RHS)

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21
Q

_____ are not government loans.

A

Conventional Loans

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22
Q

____ is a person conveying interest in real property to another party.

A

The Grantor

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23
Q

_____ is a type of insurance that covers in the event of physical damage to a property in the form of fire, wind, vandalism, or other hazards.

A

Hazard Insurance

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24
Q

What is the definition of a liquid asset?

A

A liquid asset is either cash or something easily turned into cash.

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25
Q

What is another term for a lender in a mortgage agreement?

A

Mortgagee

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26
Q

What is owner financing?

A

When a seller provides all or part of the financing.

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27
Q

A ____ is 1% of the amount of the mortgage.

A

Point

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28
Q

What is a power of attorney?

A

A person who derives power from a legal document and grants someone complete or limited authority on behalf of someone.

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29
Q

_______ 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

Principal

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30
Q

______ a written promise to repay a specific amount over a specified period of time

A

Promissory Note

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31
Q

What is the definition of a real estate agent?

A

A licensed person who negotiates and transacts the sale of real estate.

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32
Q

_____ takes place when a buyer assumes the sellers mortgage in a transaction.

A

An Assumption

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33
Q

A ____ is a legal document conveying title to a property.

A

Deed

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34
Q

Which type of clause allows a lender to demand payment if the borrow defaults on the loan or transfers title to another without informing the lender.

A

Acceleration Clause

35
Q

What is the most popular type of Bankruptcy and what does it entail?

A

Chapter 7 No Asset Bankruptcy;

Relieves the borrower of most types of debts.

36
Q

What is the definition of a “Broker”?

A

A broker is one who can;

  • own a real estate firm
  • work for another broker who owns a firm
  • broker loans in the mortgage industry

-Anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee

37
Q

When a ______ is in a sales contract, a 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.

A

Normal Contingency

38
Q

____ Loans are home loans that are not VA or FHA loans. Usually through a bank or mortgage company.

A

Conventional Loans

39
Q

A _____ is a report of someones credit history which is prepared by a credit bureau and used by a lender in the loan qualification process. Determines a loan applicants credit worthiness.

A

Credit Report

40
Q

What is the definition of a “default”?

A

Failure to make the mortgage payment within a specified period of time, usually 30 days for first mortgages or first trust deeds, causes a loan to be in default.

41
Q

______ is a term used by appraisers to estimate the physical condition of a building.

  • May differ from the buildings actual age*
  • May be shorter or longer than the effective age*
A

Effective Age

42
Q

Definition of Equity

A
  • Difference between fair market value and what is stil owed on the mortgage and any other liens
  • A Homeowners financial interest in a property
43
Q

____ is an improvement that illegally intrudes onto another person property. An easement would be the legal version of this.

A

Encroachment

44
Q

A ____ is a government loan that is not a VA Loan

A

FHA Mortgage insured by the Federal Housing Administration

45
Q

____ is a person to who an interest in real property is conveyed.

A

Grantee

46
Q

Definition of a Home Equity Line of Credit

A

A mortgage loan usually in second position; allows a borrower to obtain cash drawn against the equity of his home, up to a predetermined amount.

47
Q

Who owns the property in joint tenancy if one of the tenants dies?

A

The remaining tenant

48
Q

_____ is a legal claim against a property that must be paid off when it is sold.

A

Lien; such as a mortgage or first trust deed.

49
Q

What is a “lock-in”?

A

A rate guaranteed by the lender for a certain period of time at a certain cost to the buyer

50
Q

_____ is the right of the government to take private property for public use upon payment of its fair market value.

A

Eminent Domain

51
Q

____ is a mortgage with a lien position subordinate to the first mortgage.

A

Second Mortgage

52
Q

What is an “adjustable rate mortgage’’?

A

The interest rate adjusts periodically, according to corresponding fluctuations in an index.

53
Q

_____ is a table showing how much of each payment is applied to interest and how much to principal.
Also shows the gradual decrease of the loan balance until it reaches zero.

A

Amortization Schedule

54
Q

_____ is a mortgage where payments are made every two weeks instead of once a month.

A

Bi-Weekly Mortgage

55
Q

What is a “Cap”?

A

Limitation on how much the loan may adjust over a period of time and for the life of the loan

56
Q

When is a real estate transaction officially “closed”?

A
  • When the closing documents have been recorded at the local recorders office
  • When all the documents are signed and money changes hands
57
Q

_____ is a record of an individuals repayment of debt

A

Credit History

58
Q

What is a “Due-On-Sale” Provision?

A

Allows a lender to demand repayment in full if the borrower sells the property that serves as a security for the mortgage

59
Q

______ is the sum total of all the real and personal property owned by an individual at the time of death.

A

Estate

60
Q

_____ is a written contract that allows a licensed real estate agent the exclusive right to sell a property for a specified time.

A

Exclusive Listing

61
Q

What are two ways “Fair Market Value” could be defined.

A
  • The most a buyer, willing but not compelled to buy would pay
  • The lowest a seller willing but not compelled to sell would accept
62
Q

_____ is a lenders agreement to make a loan to a specific borrower on a specific property.

A

Firm Commitment

63
Q

____ is when personal property is attached to real property in a permanent manner to real estate

A

Fixture

64
Q

____ is a thorough inspection by a professional that evaluates the structural and mechanical condition of the property.. Often a contingency in a contract that it turns out satisfactory.

A

Home Inspection

65
Q

What is “Homeowners Insurance”?

A

Combines personal liability insurance and hazard insurance coverage for a dwelling and its contents

66
Q

What options does a lease entail?

A
  • Alternative to financing, which allows home buyers a lease to own option
  • May consist of an additional amount which can be applied toward the down payment on an already specified price
67
Q

_____ is a sum of borrowed money generally repaid with interest.

A

Loan

68
Q

What is a “Legal Description”?

A

Describes the property and is recognized by law; sufficient to locate and identify the property without oral testimony.

69
Q

_____ is the date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.

A

Maturity

70
Q

Definition of ‘Mortgagor”

A

Borrower in a mortgage agreement.

71
Q

____ is any property not part of the real property.

A

Personal Property

72
Q

____ is a penalty charged to a borrower who pays off a loan before its due

A

Prepayment Penalty

73
Q

What is the definition of “Pre-Approval”?

A

A borrow has;

  • Completed a loan application
  • Provided debt, income, and savings documentation that has been reviewed and approved by an underwriter.
74
Q

_____ must equal the cash amount that the borrower would have to pay for principal, interest, taxes, and insurance for a predefined number of months.

A

PITI Reserves

75
Q

What is the purpose of a “public auction”?

A

to sell property to repay mortgage that is in default

76
Q

“Realtor” definition

A

Agent, Broker, or Associate who holds active membership in a local real estate board which is affiliated with the National Association of Realtors

77
Q

______ applies to the original amortization term minus the number of repayments that have been applied.

A

Remaining Term

78
Q

What is “Revolving Debt”?

A

A credit arrangement (credit card) which allows a customer to borrow against a pre-approved line of credit when purchasing goods or services.
The borrower is billed for the amount that is actually borrowed plus any interest due.

79
Q

What does a survey show?

A
  • Precise legal boundaries
  • Location of improvements
  • Easements
  • Rights of Way
  • Encroachments
  • Other physical features
80
Q

______ is an agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.

A

Seller Carry-Back

81
Q

What does a “Title Company” specialize in?

A

examining and insuring titles to real estate

82
Q

____ a state or local tax payable when title passes from one owner to another

A

Transfer Tax

83
Q

What is a “Truth in Lending”?

A

Federal law requiring lenders to fully disclose in writing the terms and conditions of a mortgage, including the annual percentage rate and other charges.

84
Q

A VA mortgage is guaranteed by who?

A

The department of Veterans Affairs

Michigan Real Estate Prep (1 decks)

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