Real Estate Vocabulary Exam

Question 1

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

Answer 1

B. An increase in the value of property

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

Question 2

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

Answer 2

B. An Assignment

• When ownership of a mortgage is transferred (assigned) from one company or individual to another, it is called an assignment.

Question 3

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

Answer 3

A. Balloon Mortgage

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

Question 4

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

Answer 4

D. Both A and B

• 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.

Question 5

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

Answer 5

C. Clear

-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.

Question 6

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

Answer 6

A. The property itself

• 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.

Question 7

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

Answer 7

A. The date the interest rate changes

-The adjustment date is the date the interest rate changes (adjusts).

Question 8

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

Answer 8

B. Earnest money deposit

• The deposit made by a potential buyer to show they are in earnest about purchasing a house is called an earnest money deposit.

Question 9

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

Answer 9

A. Easement

• An easement is a right-of-way to persons other than the owner and gives them legal access.

Question 10

What 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

Answer 10

B. A housing development created by dividing a tract of land into individual lots

• A subdivision consists of individual lots created from a larger tract (subdivided) and are offered for sale or lease.

Question 11

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

Answer 11

B. Sweat Equity

• Sweat equity is the contribution to the construction of or rehabilitation of a property in the form of labor or services rather than cash.

Question 12

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

Answer 12

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.

• 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.

Question 13

A legal document evidencing a person’s right to our ownership of a property is called a:

A. quitclaim deed

B. title

C. yearly lease

D. accurate appraisal

Answer 13

B. Title

• A title is a legal document evidencing a person’s right to or ownership of a property.

Question 14

If you were buying a house that included furnishings, you would receive a written document transferring title to the personal property. This document is called a/an

A. title

B. deed

C. bill of sale

D. evidence of payment

Answer 14

C. Bill of Sale

• A bill of sale is a written document that transfers personal property from one owner to another.

Question 15

An oral or written agreement that is binding in a court of law is called a:

A. gentlemen’s agreement

B. contract

C. business deal

D. promissory note

Answer 15

B. Contract

• A contract can be oral or written and is binding in a court of law.

Question 16

The part of the purchase price of a property that the buyer pays in cash and does not finance with the mortgage is called the

A. deposit

B. second mortgage

C. down payment

D. deed of trust

Answer 16

D. Deed of Trust

• The down payment is the amount paid down in cash as the initial upfront portion of the total amount due. It is usually given in cash at the time of finalizing the transaction.

Question 17

A female named in a will to administer an estate is called an

A. executor

B. executrix

C. individual representative

D. able inheritor

Answer 17

B. Executrix

• The female executor named in a will to administer an estate is called an executrix.

Question 18

The greatest possible interest a person can have in real estate is called

A. fee complex

B. fee simple

C. no additional fees

D. ownership

Answer 18

B. Fee Simple

• The greatest possible interest a person can have in real estate is called fee simple.

Question 19

Required for properties located in federally designated flood areas, this type of insurance compensates for physical property damage resulting from flooding. It is called

A. water damage insurance

B. hurricane insurance

C. there’s no such thing

D. flood insurance

Answer 19

D. Flood Insurance

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

Question 20

The following is true of a government loan:

A. It is guaranteed by the Department of Veterans Affairs (VA)

B. It is guaranteed by the Rural Housing Service (RHS)

C. It is insured by the Federal Housing Administration (FHA)

D. All of the above

Answer 20

D. All of the Above

• Government loans are either insured by FHA, guaranteed by VA or RHS. Mortgages that are not government loans are called conventional loans.

Question 21

The person conveying an interest in real property is called

A. the buyer

B. the grantee

C. the grantor

D. the mortgagor

Answer 21

C. The Grantor

• The grantor is the person conveying an interest in real property to another party.

Question 22

Insurance that covers in the event of physical damage to a property from fire, wind, vandalism, or other hazards is called

A. act of God insurance

B. hazardous insurance

C. hazard insurance

D. there is no such insurance

Answer 22

C. Hazard Insurance

• Insurance covering physical damage to a property from fire, wind, vandalism, or other hazards is called hazard insurance.

Question 23

A liquid asset is

A. an asset which is not in solid form

B. an asset which cannot be frozen

C. a cash asset or an asset easily turned into cash

D. an asset that is hard to get to

Answer 23

C. A cash asset or an asset easily turned into cash

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

Question 24

Another term for the lender in a mortgage agreement is the

A. banker

B. mortgagee

C. mortgagor

D. private mortgage company

Answer 24

B. Mortgagee

• The mortgagee is the lender

Question 25

If you are buying a house and asking the seller to provide all or part of the financing, you are asking for _______ financing. A. special B. owner C. personal D. non-bank

Answer 25

B. Owner - When the seller provides all or part of the financing it is called owner financing.

Question 26

A point is...? A. the part of the pen you sign a contract with B. a score in a basketball game C. the reason for telling the story D. 1% of the amount of the mortgage

Answer 26

D. 1% of the amount of the mortgage - A point is 1 % of the amount of the mortgage.

Question 27

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

Answer 27

B. Complete or limited authority on behalf of someone else - A power of attorney derives power from a legal document and grants someone complete or limited authority on behalf of someone.

Question 28

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

Answer 28

D. Both A and B - 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.

Question 29

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

Answer 29

A. - A written promise to repay a specified amount over a specified period of time.

Question 30

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 negotiated and transacts the sale or real estate but is not licensed D. A person who sells both property and insurance

Answer 30

A. A licensed person who negotiates and transacts the sale of real estate. - A real estate agent is a licensed person who negotiates and transacts the sale of real estate.

Question 31

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

Answer 31

B. When the buyer assumes the seller's mortgage - When the buyer assumes the seller's mortgage is a transaction called an assumption.

Question 32

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

Answer 32

C. Deed - A deed is a legal document conveying title to property.

Question 33

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

Answer 33

B. Acceleration Clause -An acceleration clause allows the lender to demand payment, most commonly if the borrower defaults on the loan or transfer title to someone without informing the lender.

Question 34

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

Answer 34

C. Chapter 7 no asset bankruptcy - The most common type for an individual is a "Chapter 7 No Asset" bankruptcy, which relieves the borrower of most types of debts.

Question 35

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

Answer 35

D. All of the Above - 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.

Question 36

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

Answer 36

A. Purchaser is able to obtain a satisfactory home inspection from a qualified inspector. - 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.

Question 37

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

Answer 37

B. Conventional -Home loans which are not VA or FHA are called conventional loans.

Question 38

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. saving account history D. credit report

Answer 38

D. Credit Report - 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.

Question 39

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

Answer 39

B. Default - 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.

Question 40

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

Answer 40

D. Effective Age - 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.

Question 41

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

Answer 41

A. Equity - 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.

Question 42

You put in a new driveway to your property, but in the process the paving goes across your property line onto your neighbor's property a few inches. This is called an A. illegal driveway B. extra benefit for your neighbor C. encroachment D. easement

Answer 42

C. Encroachment - An improvement that intrudes illegally on another's property is called an encroachment. An easement would be a LEGAL intrusion.

Question 43

A government loan that is not a VA loan would be a/an A. FHA mortgage B. FDA mortgage C. This type loan does not exist D. ARM mortgage

Answer 43

A. FHA mortgage - A mortgage which is insured by the Federal Housing Administration (FHA) and is the other type of government loan besides a VA loan is an FHA mortgage.

Question 44

If you convey an interest in real property to a relative, that person is known as the A. receiver B. mortgagor C. grantee D. lucky relative

Answer 44

C. Grantee - The person to whom an interest in real property is conveyed is the grantee.

Question 45

You decide you want to buy a boat and you want to borrow against the equity in your home. You would get a mortgage loan up to a specified amount which is in second position to your first mortgage. This arrangement is called a A. perfectly acceptable way to buy a boat B. leverage against your house C. home equity line of credit D. line of credit for personal purposes

Answer 45

C. home equity line of credit - A mortgage loan, usually in second position, which allows the borrowers to obtain cash drawn against the equity of his home, up to a predetermined amount, is know as home equity line of credit.

Question 46

You are your sister are joint tenants in a home your mother left you. Your sister has three children in her will and you have one. If she dies first, who does the property go to? A. It is divided equally between her three children B. It goes entirely to you C. It is divided equally between her three children and your one D. It goes into her estate

Answer 46

B. It goes entirely to you - In the event of death in joint tenancy, the survivor owns the property in its entirety.

Question 47

What is the best description of a lien? A. Something that doesn't stand up straight in a house B. Something that's illegal C. A legal claim against property that must be paid off when it's sold D. None of the above

Answer 47

C. A legal claim against property that must be paid off when it's sold. - A lien, such as a mortgage of first trust deed, is a legal claim against a property that must be paid off when it is sold.

Question 48

What is a lock-in? A. A gated community which locks the gate at midnight B. An agreement from a lender guaranteeing a specific interest rate for a specific time at a certain cost C. What parents do with wayward children D. A type of key available at most hardware stores

Answer 48

B. An agreement from a lender guaranteeing a specific interest rate for a specific time at a certain cost. - A lock-in is a rate guaranteed by the lender for a certain period of time at a certain cost to the buyer.

Question 49

The right of government to take private property for public use upon payment of its fair market value. It is the basis for condemnation proceedings. A. Eminent Domain B. Government Domain C. Encroachment D. Both A and B

Answer 49

A. Eminent Domain - Eminent Domain the right of the government to take private property for public use upon payment of its fair market value.

Question 50

A mortgage with a lien position subordinate to the first mortgage on a piece of property is called a: A. second mortgage B. first subordinate mortgage C. mortgage which isn't legal D. lien position mortgage

Answer 50

A. Second Mortgage - A second mortgage is a mortgage with a lien position subordinate to the first mortgage.

Question 51

An adjustable-rate mortgage, also known as an ARM is A. one in which the interest rate is fixed over time B. one in which the interest rate changes periodically, depending on index changes C. one in which the interest rate changes periodically, depending on the stock market D. a type of mortgage that the mortgagor can adjust himself

Answer 51

B. One in which the interest rate changes periodically, depending on index changes. - An adjustable-rate mortgage in one in which the interest rate adjusts periodically, according to corresponding fluctuations in an index.

Question 52

A schedule that shows how much of each payment will be applied to principal and how much toward interest over the life of the loan is called a/n A. amortization schedule B. annual percentage rate C. assumption D. both A and C

Answer 52

A. amortization schedule - An amortization schedule is a table showing how much of each payment is applied to interest and how much to principal. It also shows the gradual decrease of the loan balance until it reaches zero.

Question 53

The term applied to a mortgage in which you make the payments every two weeks, thereby making thirteen payments a year rather than twelve. This mortgage is paid off faster than a normal mortgage. A. Twice-monthly mortgage B. Accelerated mortgage C. Bi-Weekly mortgage D. None of the above

Answer 53

C. Bi-Weekly mortgage - A mortgage in which you make payments every two weeks instead of once a month is called a bi-weekly mortgage.

Question 54

The limitation of how much an adjustable-rate mortgage may adjust over a six-month period, annual period, and over the life of the loan is called a A. buy-down B. high point C. top stop D. cap

Answer 54

D. Cap - The limitation on how much the loan may adjust over a period of time and for the life of the loan is a cap.

Question 55

When is a real estate transaction considered to be "closed"? A. When the buyer has signed all the sales contracts B. When the closing documents have been recorded at the local recorder's office C. When all the documents are signed and money changes hands D. Both B and C

Answer 55

D. Both B and C - In some states "closed" means when the documents are recorded at the courthouse, and in others it is a meeting where the documents are signed and money changes hands.

Question 56

A record of an individual's repayment of debt, reviewed by mortgage lenders in determining credit risk is called a: A. credit affidavit B. credit history C. there is no such record D. credit worthiness

Answer 56

B. Credit History - A record of an individual's repayment of debt is called a credit history.

Question 57

If you sell your property to a neighbor and the lender demands repayment in full, this means you have a _____________ in your mortgage. A. Seller pay all provision B. Buyer pays all provision C. Due-on-Sale provision D. None of the above

Answer 57

C. Due-on-Sale provision - A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage is called a due-on-sale provision.

Question 58

The sum total of all the real and personal property owned by an individual at time of death is called their A. estate B. probate C. will D. all of the above

Answer 58

A. Estate - The sum total of all the real and personal property owned by an individual at time of death is called an estate.

Question 59

If you list your property with a real estate agent and sign a written agreement that they are the only ones entitled to a listing for a specific time you have given them an A. Exclusive Listing B. Exclusive right to advertise C. Exclusive right to show D. Inclusive listing

Answer 59

A. Exclusive Listing - A written contract giving a licensed real estate agent the exclusive right to sell a property for a specified time is called an exclusive listing.

Question 60

Fair market value could be defined as: A. how much a property is worth, determined by a realtor’s market analysis B. the most a buyer, willing, but not compelled to buy, would pay C. the least a seller, willing, but not compelled to sell, would take D. both B and C

Answer 60

D. Both B and C - Fair market value is the highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

Question 61

If a lender agrees to make a loan to a specific borrower on a specific property, he has made a: A. decision to make the loan B. statement that both the buyer and the property pass inspection C. firm commitment D. both B and C

Answer 61

C Firm Commitment - A lender’s agreement to make a loan to a specific borrower on a specific property is called a firm commitment.

Question 62

If you buy a house and build cabinets into the wall, then sell that house, the cabinets stay because they have become a: A. type of attachment B. fixture C. part of the house D. none of the above

Answer 62

B. Fixture - Personal property becomes real property when attached in a permanent manner to real estate and is called a fixture.

Question 63

A home inspection is: A. a thorough inspection by a professional which evaluates the structural and mechanical condition of a property. B. not required by law C. often a contingency in a contract that it turns out satisfactorily D. both A and C

Answer 63

D. Both A and C - A home inspection is a thorough inspection by a professional that evaluates the structural and mechanical condition of the property. A satisfactory home inspection is often a contingency.

Question 64

An insurance policy which combines personal liability insurance and hazard insurance coverage for a dwelling and its contents is called: A. homeowner's insurance B. buyer's insurance C. errors and omissions insurance D. all of the above

Answer 64

A. homeowner's insurance - Homeowner's insurance combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

Question 65

Which of the following is true of a lease-option? A. It is an alternative financing option B. Each month’s rent may also consist of an additional amount applied toward the purchase C. The price is already set in the beginning D. All of the above

Answer 65

D. All of the above - A lease-option is an alternative financing option that allows home buyers to lease a home with an option to buy. Each month’s rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price.

Question 66

In simple terms, a sum of borrowed money (principal) usually repaid with interest is called a A. mortgage B. loan C. conventional loan D. alternative mortgage

Answer 66

B. Loan -A sum of borrowed money generally repaid with interest is simply a loan.

Question 67

A property description which is recognized by law and is sufficient to locate and identify the property without oral testimony is known as the property’s: A. address B. 911 address C. legal description D. identifying information

Answer 67

C. Legal Description - A legal description describes the property and is recognized by law. It is sufficient to locate and identify the property without oral testimony.

Question 68

The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable is called A. its due date B. maturity C. end of the paper trail D. delivery

Answer 68

B. Maturity - The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable is called maturity.

Question 69

The person borrowing money in a mortgage agreement is called the: A. mortgagor B. mortgagee C. borrower D. lessee

Answer 69

A. Mortgagor - The borrower in a mortgage agreement is called the mortgagor.

Question 70

Which of the following is true about an origination fee? A. It applies to both government and conventional loans B. It is usually 1% on a government loan C. It is usually 2% on a conventional loan D. Both A and B

Answer 70

D. Both A and B - Origination fees apply to government and conventional loans. A government loan origination fee is one percent of the loan amount, but additional points may be charged which are called “discount points”. In a conventional loan, the origination fee refers to the total number of points a borrower has to pay.

Question 71

Which of the following falls under the term "personal property"? A. A garage attached to a house B. A sofa C. The front porch of a home D. The windows in a home

Answer 71

B. A sofa - Personal property is any property that is not part of the real property. A, C, and D are all parts of the house.

Question 72

In some cases if a borrower pays off a loan before it is due he may encounter a penalty called a : A. penalty for early withdrawl B. loan to value penalty C. prepayment penalty D. there is never a penalty for paying a loan off early

Answer 72

C. Prepayment Penalty - A fee that may be charged to a borrower who pays off a loan before it is due is known as a prepayment penalty.

Question 73

Which of the following statements is true regarding the term "pre-approval"? A. It applies only to the property B. It is done before the loan application is complete C. It is a loosely used term D. None of the above

Answer 73

C. It is a loosely used term - Pre-approval is a loosely used term generally taken to mean a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved.

Question 74

PITI reserves applies to: A. a cash amount the borrower must have on hand after down payment and closing costs. B. an amount which is financed with the mortgage C. both A and B D. none of the above

Answer 74

A. A cash amount the borrower must have on hand after down payment and closing costs. - PITI reserves must equal the cash amount that the borrower would have to pay for principal, interest, taxes, and insurance for a predefined number of months.

Question 75

Why would a public auction take place? A. It's a good way to buy property B. To inform the public about property for sale C. To help auctioneers get employment D. To sell property to repay a mortgage in defaults

Answer 75

D. To sell property to repay a mortgage in defaults - A public auction is a meeting in an announced public location to sell property to repay a mortgage that is in default.

Question 76

The term "realtor" applies to A. any real estate agent who has passed the state exam B. any real estate agent whose license is active C. any real estate agent who is a member of a local real estate board affiliated with the National Association of Realtors. D. any real estate agent who belongs to his local board

Answer 76

C. any real estate agent who is a member of a local real estate board affiliated with the National Association of Realtors. - A realtor is defined as an agent, broker, or associate who holds active membership in a local real estate board which is affiliated with the National Association of Realtors.

Question 77

"Remaining Term" refers to... A. the remaining school term for a real estate class B. the original amortization term minus the number of payments that have been applied C. the months left in a pregnancy D. all of the above

Answer 77

B. The original amortization term minus the number of payments that have been applied. -The remaining term applies to the orginal amortization term minus the number of payments that have been applied.

Question 78

Which of the following is not true of a "revolving debt"? A. It is a type of credit arrangement, like a credit card B. It revolves around no interest for the first six month C. A customer borrows against a pre-approved line of credit D. The customer is billed for the amount borrowed plus any interest due

Answer 78

B. It revolves around no interest for the first six months - Revolving debt is a credit arrangement, such as a credit card, which allows a customer to borrow against a pre-approved line of credit when purchasing good and services. The borrower is billed for the amount that is actually borrowed plus any interest due.

Question 79

Which of the following does a survey not show? A. Precise legal boundaries of a property B. Location of improvements, easements, rights of way C. Encroachments D. Location of furnishings within the dwelling

Answer 79

D. Location of furnishing within the dwelling - A survey is a drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, right of way, encroachments, and other physical features.

Question 80

What is meant by "seller carry-back"? A. The seller physically carries his furnishings out of the house on the day of closing. B. The seller agrees to be on the mortgage with the buyer C. the seller provides financing, often in combination with an assumable mortgage D. The seller carries the principal, but not the interest on a loan

Answer 80

C. The seller carries the principal, but not the interest on a loan - A seller carry-back is an agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.

Question 81

A title company is one which A. is usually not needed in a real estate transaction B. is not called upon until one year after the sale is closed C. specializes in examining and insuring titles to real estate D. specializes in preparing deeds and deeds of trust

Answer 81

C. Specializes in examining and insuring titles to real estate - A title company specializes in examining and insuring titles to real estate.

Question 82

A state or local tax which is payable when title passes from one owner to another is called a A. title tax B. transfer tax C. revenue stamps D. real estate tariff

Answer 82

B. transfer tax - State or local tax payable when title passes from one owner to another is called transfer tax.

Question 83

What is Truth-in-Lending? A. A state law requiring lenders to fully disclose in writing all terms and conditions of a mortgage. B. A federal law requiring lenders to fully disclose in writing all terms and conditions of a mortgage C. A local law requiring lenders to filly disclose in writing all terms and conditions of a mortgage D. None of the above

Answer 83

B. A federal law requiring lenders to fully disclose in writing all terms and conditions of a mortgage. - Truth-in-Lending is 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.

Question 84

A VA mortgage... A. is a conventional mortgage for the state of Virginia B. is guaranteed by the Department of Veterans Affairs C. originates in Texas but ends up in Virginia D. in available to anyone applying for a mortgage

Answer 84

B. Is guaranteed by the Department of Veterans Affairs - A VA mortgage is guaranteed by the Department of Veterans Affairs

Question 85

Which of the following is not true of "amortization"? A. Over time the interest portion increases as the loan balance decreases B. Over time the interest portion decreases as the loan balance decreases C. Over time the amount applied to principal increases so the loan is paid off in the specified time D. None of the above

Answer 85

A. Over time the interest portion increases as the loan balance decreases. -The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time the interest portion decreases as the loan balance decreases and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.

Question 86

The valuation placed on property by a public tax assessor for taxation purposes is called... A. real value B. fair market value C. assessed value D. predicted value

Answer 86

C. Assessed Value - The valuation placed on property by a public tax assessor for purposes of taxation is called assessed value.

Question 87

If a veteran is eligible for a VA loan, he or she would receive a document from the VA called A. Certificate of Authenticity B. Certificate of Approval C. Certificate of Met Requirements D. Certificate of Eligibility

Answer 87

D. Certificate of Eligibility - A certificate of eligibility is a document issued by the Veteran's Administration that certifies a veteran's eligibility for a VA loan.

Question 88

Which of the following usually earns the largest commissions in a real estate transaction? A. Attorneys B. Realtors C. Loan Officers D. Home warranty companies

Answer 88

B. Realtors - Realtors generally earn the largest commissions, followed by lenders.

Question 89

An unwritten body of law based on general custom in England and used to an extent in some states is called A. common law B. uncommon law C. casual law D. it isn't law if it's not written down

Answer 89

A. common law - An unwritten body of law based on general custom in England and used to an extent in some states is called common law.

Question 90

If a real estate afent is trying to determine the market value of a property, one thing they would use is recent sales of similar properties or A. neighbors' estimates of the value of the property B. records from several years back in the same neighborhood C. comparable sales D. sales they estimate to happen in the future

Answer 90

C. Comparable Sales - Recent sales of similar properties in nearby areas and used to help determine the market value of a property are called comparable sales, or "comps".

Question 91

A person to whom money is owed is known as a A. debtor B. creditor C. mortgagee D. lender

Answer 91

B. Creditor - A creditor is a person to whom money is owed.

Question 92

Discount points refer to A. a system of figuring out how much the property will be discounted B. points paid in addition to the one percent loan origination fee C. usually only FHA and VA loans D. both B and C

Answer 92

D. Both B and C - This term is usually used in reference to only government loans (FHA and VA). Discount points are any points paid addition to the one percent loan origination fee.

Question 93

Which of the following can the Equal Credit Opportunity Act ( ECOA) not discriminate against? A. Race, Color and Religion B. National Origin C. Age, Sex, or Marital Status D. All of the above

Answer 93

D. All of the above - ECOA is a federal law requiring lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Question 94

An exclusive listing is one which gives a licensed real estate agent the exclusive right to sell a property A. until it sells B. until the owner takes it off the market C. for a specified period of time D. none of the above

Answer 94

C. For a specified period of time - An exclusive listing gives a licensed real estate agent the exclusive right to sell a property for a specified period of time.

Question 95

Which of the following is true about Fannie Mae's Community Home Buyer's program? A. It is an income-based community lending model B. It has flexible underwriting guidelines to increase low to moderate income family's buying power C. Borrows who participate must attend pre-purchase home-buyer education sessions. D. All of the above

Answer 95

D. All of the above - Fannie Mae's Community Home Buyer's Program is an income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low or moderate income family's buying power and to decrease the total amount of cash needed to purchase a home. Participating borrows are required to attend pre-purchase home-buyer education sessions.

Question 96

The mortgage that is in first place among any loans recorded against a property and usually refers to the date in which loans are recorded, but not always, is called a A. primary mortgage B. first in line mortgage C. first mortgage D. both A and B

Answer 96

C. First Mortgage - The mortgage that is in first place is a first mortgage.

Question 97

The legal process by whcih a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property is called a A. takeover by the mortgage company B. public auction C. foreclosure D. proceeds sale

Answer 97

C. Foreclosure - The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property is called a foreclosure.

Question 98

Loans against 401k plans are A. not allowed for down payments on property B. an acceptable source of down payment for most types of loans C. too great a risk for most people to take D. only allowed if you're accumulated $50,000 in the plan

Answer 98

B. An acceptable source of down payment for most types of loans - Some administrators of 401(k) /403B plans allow for loans against the monies you have accumulated in these plans. Loans against 401k plans are an acceptable source of down payment for most types of loans.

Question 99

A late charge is A. the penalty a borrower pays when a payment is late a stated number of days B. usually put into play when the payment is fifteen days late on a first mortgage C. usually not applicable to most people D. both A and B

Answer 99

D. Both A and B - A late charge usually kicks in after fifteen days on a first mortgage and is a penalty a borrower must pay.

Question 100

A person's financial obligations are known as his A. payments B. assets C. liabilities D. credit risks

Answer 100

C. Liabilities - A person's financial obligations are called liabilities and include long-term and short-term debt and any other amounts owed to others.

Question 101

Which of the following is not true of annual percentage rate (APR)? A. IT is the note rate on your loan B. It is not the note rate on your loan C. It is a value created according to a government formula intended to reflect the true cost of borrowing, expressed as a percentage. D. Is always higher than the actual note rate on your loan.

Answer 101

A. It is the note rate on your loan - Annual percentage rate is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. The APR is always higher than the actual note rate on your loan.

Question 102

An individual qualified by education, training, and experience to estimate the value of real property and personal property and who usually works independently is called an A. estimator of value B. appraiser C. on-site inspector D. underwritier

Answer 102

B. Appraiser - An appraiser is an individual qualified by education, training, and experience to estimate the value of real and personal property. Some work for lenders, but most are independent.

Question 103

Which of the following best describes a "balloon payment"? A. Payment delivered with a "bang" B. First of many payments on a mortgage C. The final lump sum payment due at the termination of a balloon mortgage D. Payments which go higher and higher each year

Answer 103

C. The final lump sum payment due at the termination of a balloon mortgage. - A balloon payment is the final lump sum payment due at the termination of a balloon mortgage.

Question 104

When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a A. refinance extra B. cash-out refinance C. home equity refinance D. adjustable lump sum refinance

Answer 104

B. Cash-Out Refinance - A cash-out refinance is when a borrower refinances his mortgage at a higher amount than the current loan balance he wants to pull our money for personal use.

Question 105

A certificate of deposit is A. the same as a down payment B. a liquid asset C. a deposit held in a bank paying a certain amount of interest to the depositor over a certain time D. a deposit held in a bank which pays double the amount of normal interest over time

Answer 105

C. A deposit held in a bank paying a certain amount of interest to the depositor over a certain time - A certificate of deposit is a time deposit held in a bank that pays a certain amount of interest to the depositor.

Question 106

Common area assessments are A. sometimes called Homeowners Association Fees B. paid by individual owners of condominiums or planned unit developments C. used to maintain the property and common areas D. all of the above

Answer 106

D. All of the above - Common area assessments are also sometimes called Homeowners Association Fees and are paid by the individual owners of condos or planned unit developments and are used to maintain the property and common areas.

Question 107

A short-term interim loan for financing the costs of construction is called a... A. flexible loan B. convertible loan C. construction loan D. not a loan, but a promissory note

Answer 107

C. Construction Loan - A short-term interim loan for financing the cost of construction is called a construction loan. The lender makes payments to the builder at periodic intervals as the work progresses.

Question 108

In simple terms, debt is A. credit extended to someone B. an amount owed to another C. an amount owed to another with interest D. repayable

Answer 108

B. An amount owed to another - Debt is an amount owed to another

Question 109

Which of the following is not true of the term "depreciation"? A. It is a decline in the value of property B. It is an accounting term showing the declining monetary value of an asset C. It is a true expense where money is actually paid D. Lenders add back depreciation expense for self-employed borrowers and count it as income

Answer 109

C. It is a true expense where money is actually paid - Depreciation is not a true expense where money is actually paid. It is a decline in the value of property and an accounting term showing the declining monetary value of an asset. Lenders add back depreciation expense for self-employed borrowers and count it as income.

Question 110

Which of the following would not be paid by escrow disbursements? A. Real Estate Taxes B. Hazard Insurance C. Mortgage Insurance D. Personal Property Taxes

Answer 110

D. Personal Property Taxes - Personal property taxes are not a typical escrow disbursement, but real estate taxes, hazard insurance and mortgage insurance are.

Question 111

The lawful expulsion of an occupant from real property is called A. conviction B. divorce from bed and board C. eviction D. there is no way to lawfully remove an occupant from real property

Answer 111

C. eviction - The lawful expulsion of an occupant from real property is called eviction.

Question 112

If you have a loan in which the interest rate does not change during the term of the loan you have a ___________ mortgage. A. Fixed-Rate B. Conventional Fixed-Rate C. Owner financing D. all of the above

Answer 112

A. Fixed-Rate - A loan in which the interest rate does not change during the term is called a fixed-rate mortgage.

Question 113

The following is true of a Home Equity Conversion Mortgage (HECM). A. It is also known as reverse annuity mortgage. B. You don't make payments to the lender, the lender makes payments to you. C. It enables older homeowners to convert their equity into cash D. All of the above

Answer 113

D. All of the above - Usually called reverse annuity mortgage, this mortgage is unique in that instead of making payments to a lender, the lender makes payments to you, allowing older homeowners to convert their equity to cash. The loan does not have to be repaid until the borrower no longer occupies the property.

Question 114

A written agreement between a property owner and tenant stipulating the conditions under which the tenant may possess the property for a specified period of time and the payment due is called a/an A. contract B. option C. lease D. lease-option

Answer 114

C. Lease - A written agreement between property owner and tenant laying out the terms of the agreement including payment and period of time is called a lease.

Question 115

A lender is A. the firm making the loan B. the individual representing the firm making the loan C. the individual offering owner financing D. both A and B

Answer 115

D. Both A and B - A lender is the firm making the loan or an individual representing the firm making the loan.

Question 116

A margin is A. a measurement of error B. an artificial line not to write in on a loan document C. both A and B D. the difference between the interest rate and the index on an adjustable-rate mortgage.

Answer 116

D. The difference between the interest rate and the index on an adjustable-rate mortgage. - Margin is the difference between the interest rate and the index on an adjustable-rate mortgage which remains stable over the life of the loan.

Question 117

Which of the following is the best definition of a mortgage broker? A. A mortgage company which originates loans, then places with other lending institutions B. A mortgage company which originates loan, then keeps them in house. C. An individual which originates loans, then sells on the secondary market. D. Much like a real estate broker, receives a commission on loans

Answer 117

A. A mortgage company which originates loans, then places with other lending institutions - A mortgage broker is a mortgage company which originates loans, then places with a variety of other lending institutions with whom they usually have pre-established relationships.

Question 118

The term "note rate" refers to: A. the speed at which a musician plays scales B. the interest rate stated on a mortgage note C. the interest rate stated on a personal loan D. the rate at which a note is amortized

Answer 118

B. the interest rate stated on a mortgage note - Note rate means the interest rate stated on a mortgage note.

Question 119

If you have not made your mortgage payment, you are likely to receive which of the following? A. Notice of non-payment B. a written eviction notice C. Notice of default D. A letter from an attorney

Answer 119

C. Notice of default - You are likely to receive a formal written notice, called a notice of default, that a default has occurred and legal action may be taken.

Question 120

A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan is called a A. late payment B. partial payment C. "too little, too late" payment D. a drop in the bucket

Answer 120

B. partial payment - A payment insufficient to cover the scheduled monthly payment on a mortgage loan is a partial payment, normally not accepted by the lender, but in times of hardship, a borrower can make a request of the loan servicing collection department.

Question 121

PITI stands for A. principal, interest, taxes and insurance B. principle, interest, taxes and insurance C. prepayment, interest, tariff and insurance D. none of the above

Answer 121

A. Principal - Interest - Taxes - Insurance - PITI

Question 122

Which of the following decribes "prepayment"? A. an amount paid to reduce the interest on a loan before the due date B. An amount paid to reduce the principal on a loan before the due date C. Can result from a sale, owner's decision to pay off the loan, or foreclosure D. Both B and C

Answer 122

D. Both B and C - A prepayment reduces the principal on loan before the due date and can result a sale, the owner's decision to pay off the loan early, or foreclosure.

Question 123

What is s private mortgage insurance? A. Mortgage insurance that is arranged for by the buyer privately B. Mortgage insurance provided by a private mortgage insurance company C. Insurance required for loans with a loan-to-value percentage in excess of 80% D. Both B and C

Answer 123

D. Both B and C - A prepayment reduces the principal on a loan before the due date and can result from a sale, the owner's decision to pay off the loan early, or foreclosure.

Question 124

If you were trying to buy a home you are the seller would need to sign a written contract called a/an A. purchase agreement B. down payment agreement C. option to purchase D. all of the above

Answer 124

A. Purchase Agreement - A written contract signed by buyer and seller stating the terms and conditions under which a property will be sold is called a purchase agreement.

Question 125

What is a recorder? A. A public official who keeps records of real property transactions B. The county clerk C. The registrar of deeds D. All of the above

Answer 125

D. All of the Above - A recorder is a public official who keeps records of real property transaction in their area and is also known by the names "county clerk" and "registrar of deeds".

Question 126

The principal balance on a mortgage is A. the outstanding balance of principal and interest B. the outstanding balance of principal only C. the amount the mortgage has been paid down D. none of the above

Answer 126

B. The outstanding balance or principal only -The principal balance is the outstanding balance of principal only on a mortgage and does not include interest or any other charges.

Question 127

Which of the following is not true about qualifying ratios? A. There are two types of ratios -- "top" or "front" and "back" or "bottom" B. The "top" ratio is a calculation of the borrower's monthly housing costs (principal, taxes, insurance, mortgage insurance, homeowners' association fees) as a percentage of monthly income C. The "back" ratio includes all monthly costs as well as 'back" taxes D. Both calculations are used in determining whether a borrower can qualify for a mortgage

Answer 127

C. The "back" ratio includes all monthly costs as well as "back" taxes - The "back" or "bottom" ratio includes housing costs as well as all other monthly debt.

Question 128

The definition of "real" property is A. property that has nothing artificial on it, only natural materials. B. land and appurtenances, including anything of a permanent nature such as structures, trees and minerals. C. things located within houses such as furniture, accessories, appliances, and clothing D. all of the above

Answer 128

B. Land and appurtenances, including anything of a permanent nature such as structures, trees, and minerals. - Real property is defined as land and appurtemamces, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits and inherent rights thereof.

Question 129

In joint tenancy, if one person dies and the other inherits the property, this is called... A. tenants in common B. whatever is stated in the will C. following the wishes of the deceased D. right of survivorship

Answer 129

D. Right of Survivorship - In joint tenancy the right of survivors to acquire the interest of a deceased joint tenant is called right of survivorship.

Question 130

A secured loan is... A. backed by collateral B. when the borrower promises something of value to the lender C. when the bank is not in danger of failing D. when the bank has been bailed out

Answer 130

A. Back by Collateral - A secured loan is backed by security, also called collateral.

Question 131

A mortgage or other type of lien that has a priority lower than that of the first mortgage is called A. a second mortgage B. subordinate financing C. first subordinate financing D. all of the above

Answer 131

B. Subordinate Financing - Subordinate financing is any mortgage or other lien that has a priority lower than the first mortgage.

Question 132

If you were buying a house and wanted to protect yourself against any loss arising from disputes over ownership of your property, you would purchase A. hazard insurance B. errors and omissions insurance C. title insurance D. deed insurance

Answer 132

C. Title Insurance - Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property is title insurance.

Question 133

Which of the following is true of the Veteran's Administration (VA)? A. It encourages lenders to make mortgages to veterans B. It is an agency of the federal government which guarantees residential mortgages made to eligible veterans C. The guarantee protects the lender against loss D. All of the above

Answer 133

D. All of the Above - An agency of the federal government, the VA guarantees residential mortgages made to eligible veterans of the military services. This guarantee protects the lender against loss and this encourages lenders to make mortgages to veterans.

Question 134

The form used to apply for mortgage loan. which contains information about a borrower's income, savings, assets, debts, and more is called a/an A. application for funds B. income documentary C. both A and B D. application

Answer 134

A. Application for funds - The form used to apply for a mortgage loan containing information about a borrower's income, savings, assets, debts, and more is called an application.

Question 135

An assessment does which of the following? A. Places a value on property for the purpose of real estate sales B. Is the same as a competitive market analysis C. Places a value on property for the purpose of taxation D. Is usually carried out by the mayor of a town

Answer 135

C. Places a value on property for the purpose of a taxation - An assessment places a value on property for the purpose of taxation.

Question 136

Which of the following is not true about the "bond market"? A. It refers to the daily buy and selling of thirty-year treasury bonds B. Lenders do not usually follow this market closely C. The same factors that affect the bond market affect mortgage rates at the same time D. Fluctuations in this market cause mortgage rates to change daily.

Answer 136

B. Lenders do not usually follow this market closely - Lenders actually do follow this market closely because the same factors that affect the Treasury Bond market also affect mortgage rates at the same time.

Question 137

What does the term "buydown" mean? A. Usually refers to a fixed rate mortgage where the interest rate is "bought down" for a temporary period, usually one to three years. B. A lump sum is paid and held in an account used to supplement the borrower's monthly payment. C. These funds can sometimes come from the seller to induce someone to buy their property. D. All of the above

Answer 137

D. All of the above - A buy-down refers to a fixed-rate mortgage where the interest rate is "bought down" for a temporary period. The funds for this can come from the seller, the lender, or some other source. The lump-sum is paid and held in an account used to supplement the borrower's monthly payment for a time and after that time the borrower's payment is calculated at the note rate.

Question 138

Certificate of Reasonable Value (CRV) applies to A. an FHA loan B. a conventional loan C. a VA loan D. a car loan

Answer 138

C. A VA Loan - Once the appraisal has been done on a property being bought with a VA loan, the VA issues a CRV.

Question 139

If you are buying a piece of property and have someone else who is obligated on the loan and is on the title to the property, that person is called a... A. spouse B. family member or friend who shares the property and payments with you C. Co-Borrower D. None of the Above

Answer 139

C. Co-Borrower - An additional individual who is both obligated on the loan and is on the title to the property is called a co-borrower.

Question 140

How would you define "collection"? A. A plate, usually at church, where money is donated B. It goes into effect when a borrower falls behind C. It applied to several or many things in the same category on a loan application D. It only applies to trash

Answer 140

B. It goes into effect when a borrower falls behind - When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan then goes to "collection" and the lender must mail and record certain documents in case they have to foreclose on the property.

Question 141

Which of the following is true of "condominium"? A. It applies to ownership, not to construction or development B. It is a type of ownership where all of the owners own each other's interior units C. It is an ownership where owners own the property, common areas, and buildings together D. Both A and C

Answer 141

D. Both A and C - A condominium is real property where all the owners own the property, common areas and building together, with the exception of the interior of the unit to which they have title. Mistakenly referred to as a type of construction or development, it actually refers to type of ownership.

Question 142

An organization which gathers, records, updates, and stores financial and public records information about the payment records of individuals being considered for credit is called a A. credit repository B. credit reporting agency C. mortgage company D. bank

Answer 142

A. Credit Repository - A credit repository is an organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals being considered for credit.

Question 143

In some states, a recorded mortgage is replaced by a... A. contract for deed B. promissory note C. deed of trust D. deed

Answer 143

C. Deed of Trust - Some states do not record mortgages but do record a deed of trust which is essentially the same thing.

Question 144

If you have failed to pay mortgage payments when they are due, it is called A. delinquency B. foreclosure C. collections D. no big deal

Answer 144

A. delinquency - Failure to make mortgage payments when they are due is called delinquency. Most are due on the first day of the month, and even though they may not charge a "late fee" for a number of days, the payment is considered to be late and the loan delinquent.

Question 145

Which of the following would not be considered an "encumbrance", limiting the fee simple title, on a piece of property? A. Leases B. Mortgages C. Easements or restrictions D. Furniture not paid for

Answer 145

D. Furniture not paid for - Encumbrances include mortgages, easements, leases, or restrictions.

Question 146

An earnest money deposit is put into this until delivered to the seller when the transaction is closed. A. the realtor's bank account B. the attorney's bank account C. the buyer's bank account D. an escrow account

Answer 146

D. An escrow account - An earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.

Question 147

Which of the following is true of the Federal National Mortgage Association (Fannie Mae)? A. It is the nation's largest supplier of mortgages B. It is congressionally charted, shareholder-owned C. It is the same as Freddie Mac D. Both A and B

Answer 147

D. Both A and B - Fannie Mae is a congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.

Question 148

An employer-sponsored investment plan allowing individuals to set aside tax-deferred income for retirement or emergency purposes is called a ________ plan. A. 436(k) / 401B B. 339(k) / 372B C. 401(k) / 403B D. both A and B

Answer 148

C. 401(k) / 403B - These plans are employer-sponsored investment plans allowing individuals to set aside tax-deferred income for retirement or emergency purposes. Private corporations provide 401(k) plans; 403B plans are provided by not for profit organizations.

Question 149

Which of the following is true of the Government National Mortgage Association, also known as Ginnie Mae? A. It is government-owned B. It was created by Congress on September 1, 2002 C. Provides funds to lenders for making home loans D. Both A and C

Answer 149

D. Ginnie Mae is government-owned, created by Congress on September 1, 1968. Ginnie Mae performs the same roles as Fannie Mae and Freddie Mac in providing funds to lenders for home loans, but it provides funds for government loans (FHA and VA).

Question 150

At what amount is a loan considered to be a "jumbo" loan, which exceeds Fannie Mae's and Freddie Mac's loan limits? It is also known as a non-conforming loan. A. $417,000 B. $227,150 C. $300,000 D. Jumbo refers to the percentage borrowed, not the amount

Answer 150

A. $417,000 - A jumbo loan is anything over $417,00.

Question 151

Usually part of a homeowner's insurance policy, this type of insurance offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party. A. Malpractice Insurance B. Liability Insurance C. Hazard Insurance D. Collision Insurance

Answer 151

B. Liability Insurance - Liability insurance protects against claims against a property owner for negligence or bodily injury or property damage to another party.

Question 152

A lender refers to the process of getting new loans as A. selling his product B. loan origination C. his bread and butter D. more than just a job

Answer 152

B. loan origination - A lender refers to the process of getting new loans as loan origination.

Question 153

The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower) is called A. value to loan B. first-time homebuyer's loan C. loan to value D. both B and C

Answer 153

C. Loan to Value - The percentage relationship between the amount of the loan and the appraised value or sales price is called loan to value.

Question 154

If you are applying for a loan, the lender gives and guarantees you a specific interest rate for a specific time. This period of time is called the A. period of no return B. rate-freeze period C. lock-in period D. period at which you cannot seek other financing

Answer 154

C. Lock-In Period - The time during which the lender has guaranteed a certain rate is called the lock-in period.

Question 155

A credit report which reports the raw data pulled from two or more of the major credit repositories is called a A. multi-credit report B. merged credit report C. this is not legal D. none of the above

Answer 155

B. Merged Credit Report - A merged credit report reports the raw data pulled from two or more of the major credit repositories.

Question 156

Sometimes, called a first trust deed, this is a legal document pledging property to the lender as security for payment of a debt. A. promissory note B. deed of trust C. owner financing document D. mortgage

Answer 156

D. Mortgage - A mortgage is a legal document pledging a property to the lender as security for payment of a debt.

Question 157

Which of the following is not true of mortgage insurance? A. It covers the lender against some of the losses incurred resulting from default on a home loan B. It is sometimes is mistakenly referred to as a PMI (private mortgage insurance) C. It is required on all loans having a loan to value of more than 90% D. No "MI" loans are usually made at higher rates

Answer 157

C. It is required on all loans having a loan to value of more than 90% - Mortgage insurance is required on all loans having a loan to value of more than 80%

Question 158

A no-point loan has an interest rate A. lower than if you pay one point B. the same as if you pay one point C. higher than if you pay one point D. a no-point loan does not exist

Answer 158

C. Higher than if you pay one point - The interest rate on a "no points" loan is approximately a quarter percent higher than on a loan where you pay one point.

Question 159

The total amount of principal owed on a mortgage before any payments are made is called the... A. total amount due B. original principal balance C. a lot less than you'll actually pay D. your down payment times ten

Answer 159

B. Original Principal Balance - The total amount of principal owed on a mortgage before any payments are made is called the original principal balance.