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Real Estate Principles > Unit 15 > Flashcards

Unit 15 Flashcards

1
Q

Learning Objective: Describe the various primary sources of mortgage money, the loan application process, and the payment plans available to real estate purchasers.

A

Answer:
Primary sources of mortgage money include banks, credit unions, mortgage companies, and savings institutions. The loan application process involves submitting financial documents, credit checks, and underwriting. Payment plans include fixed-rate loans, adjustable-rate mortgages (ARMs), and biweekly payment plans.

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2
Q

Learning Objective: Explain the provisions of and qualifications for conventional, FHA, VA, agricultural, and Texas loan programs.

A

Answer:
Conventional loans require higher credit scores and down payments. FHA loans are insured by the Federal Housing Administration, offering lower down payment options. VA loans are for eligible veterans and qualifying spouses with favorable terms. Agricultural loans assist farmers and ranchers. Texas-specific loans, such as the Veterans Land Board (VLB) loan program, provide tailored benefits for state residents.

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2
Q

Learning Objective: Distinguish among the various types of creative financing techniques that address borrowers’ different needs.

A

Answer:
Creative financing includes wraparound loans, shared-appreciation mortgages, seller financing, and buydown mortgages. These options allow flexibility for borrowers with unique financial situations or needs.

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3
Q

Learning Objective: Identify the mechanisms used by the Federal Reserve System (“the Fed”) to control the economy and the entities that participate in the secondary mortgage market.

A

Answer:
The Federal Reserve controls the economy by adjusting the discount rate, reserve requirements, and open market operations. Entities in the secondary mortgage market include Fannie Mae, Freddie Mac, and Ginnie Mae, which buy, pool, and sell mortgage-backed securities.

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3
Q

Learning Objective: Review legislation affecting real estate financing and activities that would be classified as predatory lending or mortgage fraud.

A

Answer:
Legislation includes the Equal Credit Opportunity Act (ECOA), Truth in Lending Act (Regulation Z), and RESPA. Predatory lending involves deceptive practices such as excessive fees and misrepresentation. Mortgage fraud includes falsifying income or property value.

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4
Q

Learning Objective: Describe the two theories of mortgage law and the two primary loan instruments executed for a mortgage loan in Texas.

A

Answer:
The two theories are title theory (lender holds title) and lien theory (borrower retains title with a lien). The primary instruments are the promissory note and the deed of trust.

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5
Q

Learning Objective: Identify the basic provisions of a promissory note and a deed of trust.

A

Answer:
A promissory note outlines the loan amount, interest rate, repayment terms, and borrower’s promise to repay. A deed of trust secures the loan with property, involving the lender (beneficiary), borrower (trustor), and a third party (trustee).

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6
Q

Learning Objective: Explain the procedures involved in a foreclosure, including the right of redemption.

A

Answer:
Foreclosure involves the lender seizing the property due to loan default. The borrower may have a redemption period to repay the debt and reclaim the property before foreclosure completion.

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7
Q

Learning Objective: Distinguish among the foreclosure-avoidance options.

A

Answer:
Options include loan modifications, forbearance agreements, short sales, and deeds in lieu of foreclosure. These strategies help borrowers avoid foreclosure while addressing financial difficulties.

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8
Q

Key Term: Acceleration Clause

A

Definition: A provision allowing the lender to demand full repayment if the borrower defaults.

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9
Q

Key Term: Adjustable-Rate Mortgage

A

Definition: A mortgage with an interest rate that adjusts periodically based on a financial index.

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10
Q

Key Term: Alienation Clause

A

Definition: A clause in a mortgage or deed of trust that requires the loan to be paid in full if the property is sold or transferred.

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11
Q

Key Term: Amortized Loan

A

Definition: A loan in which payments are made in regular installments, reducing both principal and interest over time.

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12
Q

Key Term: Automated Underwriting

A

Definition: A computerized process used by lenders to evaluate a borrower’s loan application based on financial data and credit history.

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13
Q

Key Term: Balloon Payment

A

Definition: A large, final payment on a loan that remains due after a series of smaller, periodic payments.

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14
Q

Key Term: Biweekly Payment Plan

A

Definition: A loan payment plan where borrowers make payments every two weeks, effectively making one extra monthly payment each year.

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15
Q

Key Term: Blanket Mortgage

A

Definition: A mortgage that covers multiple properties or parcels of land, often used by developers.

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16
Q

Key Term: Buydown Mortgage

A

Definition: A financing arrangement in which a seller or builder pays a portion of the interest to reduce the borrower’s monthly payments.

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17
Q

Key Term: Computerized Loan Origination (CLO)

A

Definition: A system that allows borrowers to apply for loans and receive approval decisions electronically.

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18
Q

Key Term: Construction Loan

A

Definition: A short-term loan used to finance the building of a property, with funds disbursed as construction progresses.

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19
Q

Key Term: Contract for Deed

A

Definition: A financing arrangement in which the buyer takes possession of the property but the seller retains title until the loan is paid in full.

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20
Q

Key Term: Conventional Loan

A

Definition: A loan not insured or guaranteed by a government agency, often requiring higher down payments and stricter qualifications.

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21
Q

Key Term: Deed in Lieu of Foreclosure

A

Definition: A voluntary transfer of property by the borrower to the lender to avoid foreclosure.

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22
Q

Key Term: Deed of Trust

A

Definition: A legal document securing a loan by transferring title to a third-party trustee until the loan is repaid.

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23
Q

Key Term: Defeasance Clause

A

Definition: A clause in a mortgage or deed of trust requiring the lender to release the borrower from the loan once it is fully paid.

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24
Q

Key Term: Deficiency Judgment

A

Definition: A court judgment against a borrower for the difference between the loan balance and the sale price of a foreclosed property.

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25
Q

Key Term: Discount Points

A

Definition: Fees paid to the lender at closing to reduce the interest rate on a loan.

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26
Q

Key Term: Equity Loan

A

Definition: A loan secured by the borrower’s equity in their property, often used for renovations or other expenses.

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27
Q

Key Term: Fannie Mae

A

Definition: The Federal National Mortgage Association (FNMA), which buys and guarantees mortgages to increase liquidity in the housing market.

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28
Q

Key Term: Farm Service Agency

A

Definition: A U.S. government agency that provides financial assistance to farmers and ranchers through loans and subsidies.

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29
Q

Key Term: Farmer Mac

A

Definition: The Federal Agricultural Mortgage Corporation, which provides a secondary market for agricultural loans.

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30
Q

Key Term: Federal Reserve System (the “Fed”)

A

Definition: The central banking system of the United States that regulates the economy by influencing interest rates and the money supply.

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31
Q

Key Term: FHA Loan

A

Definition: A mortgage insured by the Federal Housing Administration, designed for borrowers with lower credit scores or smaller down payments.

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32
Q

Key Term: Flexible-Payment Loan

A

Definition: A loan with flexible repayment terms that allow for variable payments, often used to match the borrower’s changing income.

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33
Q

Key Term: Foreclosure

A

Definition: The legal process by which a lender takes possession of a property due to the borrower’s failure to repay the loan.

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34
Q

Key Term: Freddie Mac

A

Definition: The Federal Home Loan Mortgage Corporation (FHLMC), which buys and securitizes mortgages to provide liquidity in the housing market.

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35
Q

Key Term: Fully Amortized Loan

A

Definition: A loan in which regular payments of principal and interest are made until the balance is completely paid off.

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36
Q

Key Term: Ginnie Mae

A

Definition: The Government National Mortgage Association (GNMA), which guarantees government-backed mortgage securities.

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37
Q

Key Term: Hypothecation

A

Definition: The practice of pledging property as collateral for a loan while retaining possession of the property.

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38
Q

Key Term: Interest

A

Definition: The cost of borrowing money, typically expressed as a percentage of the loan amount.

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39
Q

Key Term: Lien Theory

A

Definition: A legal theory in which the borrower retains title to the property while the lender has a lien as security for the loan.

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40
Q

Key Term: Loan Origination Fee

A

Definition: A fee charged by the lender for processing a new loan application, typically expressed as a percentage of the loan amount.

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41
Q

Key Term: Loan-to-Value Ratio (LTV)

A

Definition: The ratio of the loan amount to the appraised value or purchase price of a property, whichever is lower.

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42
Q

Key Term: Mortgage

A

Definition: A legal agreement in which a borrower pledges property as security for a loan.

43
Q

Key Term: Mortgage-Backed Securities

A

Definition: Investments that are secured by mortgages, allowing lenders to sell mortgages and free up funds for new loans.

44
Q

Key Term: Mortgagee

A

Definition: The lender in a mortgage agreement.

45
Q

Key Term: Mortgagor

A

Definition: The borrower in a mortgage agreement.

46
Q

Key Term: Negotiable Instrument

A

Definition: A written promise or order to pay a specified sum of money, transferable to a third party.

47
Q

Key Term: Nonrecourse Note

A

Definition: A loan agreement in which the lender’s only recourse in case of default is to seize the collateral, with no further claims against the borrower.

48
Q

Key Term: Open-End Mortgage

A

Definition: A mortgage that allows the borrower to increase the loan amount at a later time under specific terms.

49
Q

Key Term: Package Mortgage

A

Definition: A mortgage that includes financing for both the property and personal items, such as appliances or furniture.

50
Q

Key Term: Power-of-Sale Clause

A

Definition: A clause in a deed of trust or mortgage that allows the lender to foreclose without court involvement.

51
Q

Key Term: Prepayment Penalty

A

Definition: A fee charged by the lender if the borrower pays off the loan early.

52
Q

Key Term: Primary Mortgage Market

A

Definition: The market where loans are originated directly between borrowers and lenders.

53
Q

Key Term: Private Mortgage Insurance (PMI)

A

Definition: Insurance required by lenders when the borrower’s down payment is less than 20%, protecting the lender in case of default.

54
Q

Key Term: Promissory Note

A

Definition: A legal document that outlines the borrower’s promise to repay a loan, including terms and conditions.

55
Q

Key Term: Purchase Money Mortgage

A

Definition: A loan made by the seller to the buyer to finance the purchase of the property, often used when traditional financing is unavailable.

56
Q

Key Term: Redemption

A

Definition: The borrower’s right to reclaim property by paying the debt in full before or after foreclosure.

57
Q

Key Term: Regulation Z

A

Definition: Part of the Truth in Lending Act that requires lenders to disclose all credit terms to borrowers, including the annual percentage rate (APR).

58
Q

Key Term: Release Deed

A

Definition: A document that releases the lien on a property when the loan is paid in full.

59
Q

Key Term: Release of Lien

A

Definition: A document filed to remove a lien from the property records after the debt has been satisfied.

59
Q

Key Term: Reverse Mortgage

A

Definition: A loan that allows homeowners 62 and older to convert home equity into cash, with no repayment required until the homeowner moves or sells.

60
Q

Key Term: Rural Development (RD)

A

Definition: A government program that provides financing for housing in rural areas.

61
Q

Key Term: Sale-and-Leaseback

A

Definition: An arrangement where the seller sells a property to a buyer and then leases it back, often to free up capital.

62
Q

Key Term: Satisfaction of Mortgage

A

Definition: A document issued by the lender when the mortgage is paid off, releasing the borrower from the debt.

63
Q

Key Term: Secondary Mortgage Market

A

Definition: The market where existing mortgages are bought and sold, providing liquidity for lenders.

64
Q

Key Term: Shared-Appreciation Mortgage

A

Definition: A loan in which the lender agrees to a reduced interest rate in exchange for a share of the property’s appreciation in value.

65
Q

Key Term: Short Sale

A

Definition: The sale of a property for less than the remaining loan balance, with lender approval.

66
Q

Key Term: Term Loan

A

Definition: A loan in which only interest is paid during the term, with the principal paid in full at the end.

67
Q

Key Term: Texas Department of Housing and Community Affairs (TDHCA)

A

Definition: A state agency that provides housing assistance and affordable loan programs for Texas residents.

68
Q

Key Term: Title Theory

A

Definition: A legal theory in which the lender holds title to the property until the loan is repaid in full.

68
Q

Key Term: Texas Veterans Land Board

A

Definition: A state agency that offers financing and benefits to Texas veterans for land and home purchases.

69
Q

Key Term: Trigger Terms

A

Definition: Specific terms in loan advertisements that require full disclosure of credit terms under Regulation Z.

70
Q

Key Term: Trust Deed

A

Definition: A legal document that secures a loan by transferring property title to a trustee for the benefit of the lender.

71
Q

Key Term: Usury

A

Definition: Charging an interest rate higher than the maximum allowed by law.

72
Q

Key Term: VA Loan

A

Definition: A mortgage loan guaranteed by the U.S. Department of Veterans Affairs, offering favorable terms for eligible veterans and spouses.

73
Q

Key Term: Warehousing Agency

A

Definition: A financial institution that provides short-term funding to mortgage lenders by purchasing and holding loans until they are sold.

74
Q

Key Term: Wraparound Loan

A

Definition: A type of financing where the new loan includes the existing loan amount and the additional funds required, with a single payment to the lender.

75
Q

The Escobars are purchasing a lakefront summer home in a new resort development. The house is completely equipped, and the Escobars have obtained a deed of trust loan that covers the purchase price of the residence, including the furnishings and appliances. This kind of financing is called
A. a wraparound deed of trust.
B. a package deed of trust.
C. a blanket deed of trust.
D. an unconventional loan.

A

Answer: B. a package deed of trust.
Reasoning: A package loan finances both real estate and personal property, such as furnishings and appliances, as described in this scenario.

76
Q

With a fully amortized mortgage or deed of trust loan,
A. each month the total payment is the same, but the allocation to interest is different.
B. the interest portion of each payment remains the same throughout the entire term of the loan.
C. periodic payments are made, but the final payment is larger.
D. the total payment varies each month, but a fixed amount is credited toward the principal.

A

Answer: A. each month the total payment is the same, but the allocation to interest is different.
Reasoning: In a fully amortized loan, the total payment stays constant, but as the principal is reduced, the portion allocated to interest decreases.

77
Q

What is the primary function of Freddie Mac?
A. To guarantee mortgages by the full faith and credit of the federal government
B. To buy and pool blocks of conventional mortgages, selling bonds with such mortgages as security
C. To act in tandem with Ginnie Mae to provide special assistance in times of tight money
D. To buy and sell VA and FHA mortgages

A

Answer: B. To buy and pool blocks of conventional mortgages, selling bonds with such mortgages as security.
Reasoning: Freddie Mac focuses on purchasing conventional loans and selling them as securities to provide liquidity to the housing market.

78
Q

Fran purchased her home more than 30 years ago. Today, she receives monthly checks from the bank that supplement her income. Fran has MOST likely obtained
A. a shared-appreciation mortgage.
B. an adjustable-rate mortgage.
C. a reverse mortgage.
D. a package loan.

A

Answer: C. a reverse mortgage.
Reasoning: Reverse mortgages allow homeowners to receive monthly payments by borrowing against the equity in their homes.

79
Q

A developer has obtained a large loan to finance the construction of a planned unit development. Which statement is NOT true?
A. This is a short-term loan, and the developer has arranged for long-term financing to repay it when the construction is completed.
B. The borrowed money is disbursed in installments, ensuring that all subcontractors and laborers have been paid properly before disbursing each installment of the loan.
C. The lender inspects the construction that has been completed to date.
D. The construction loan is called a takeout loan.

A

Answer: D. The construction loan is called a takeout loan.
Reasoning: A construction loan is a short-term loan for building, while a takeout loan is long-term financing used to repay the construction loan.

80
Q

The D’Angelos purchased a residence for $95,000. They made a down payment of $15,000 and agreed to assume the seller’s existing mortgage, which had a current balance of $23,000. The D’Angelos financed the remaining $57,000 of the purchase price by executing a mortgage and note to the seller. This type of loan, by which the seller becomes the lender, is called
A. a substitute lender mortgage.
B. a package mortgage.
C. a balloon note.
D. a purchase money mortgage.

A

Answer: D. a purchase money mortgage.
Reasoning: A purchase money mortgage is provided by the seller to the buyer as part of the purchase agreement.

81
Q

When the Federal Reserve Board raises its discount rate, which of the following should happen?
A. Interest rates will rise.
B. Interest rates will fall.
C. The amount of money circulated in the marketplace will increase.
D. Lenders will be willing to make more mortgage loans.

A

Answer: A. Interest rates will rise.
Reasoning: When the Fed increases the discount rate, it raises borrowing costs for banks, which in turn increases interest rates for consumers.

82
Q

Discount points on a mortgage are computed as a percentage of
A. the selling price.
B. the amount borrowed.
C. the closing costs.
D. the down payment.

A

Answer: B. the amount borrowed.
Reasoning: Discount points are calculated as a percentage of the loan amount and paid upfront to lower the interest rate.

83
Q

Which BEST defines the secondary mortgage market?
A. Lenders who deal exclusively in second mortgages
B. A market where loans are bought and sold after they have been originated
C. The major lender of residential mortgages and trust deeds
D. The major lender of FHA and VA loans

A

Answer: B. A market where loans are bought and sold after they have been originated.
Reasoning: The secondary mortgage market enables lenders to sell loans and replenish funds for new loans.

84
Q

Terrence purchased a new residence for $175,000. He made a down payment of $15,000 and obtained a $160,000 mortgage loan. The builder of the house paid the lender 3% of the loan balance for the first year and 2% for the second year. This represented a total savings for Terrence of $8,000. What type of mortgage does this represent?
A. Wraparound
B. Package
C. Blanket
D. Buydown

A

Answer: D. Buydown.
Reasoning: A buydown mortgage involves the seller or builder paying a portion of the interest to lower the borrower’s monthly payments temporarily.

85
Q

Funds for FHA-insured loans are usually provided by
A. the Federal Housing Administration (FHA).
B. the Federal Deposit Insurance Corporation (FDIC).
C. approved lending institutions.
D. Fannie Mae.

A

Answer: C. approved lending institutions.
Reasoning: The FHA insures loans, but the funds are provided by approved private lenders such as banks and mortgage companies.

86
Q

The federal Equal Credit Opportunity Act prohibits lenders from discriminating against potential borrowers on the basis of all of the following EXCEPT
A. sex.
B. national origin.
C. source of income.
D. amount of income.

A

Answer: D. amount of income.
Reasoning: While the ECOA prohibits discrimination based on the source of income, lenders may consider the amount of income to determine creditworthiness.

87
Q

Under the provisions of Regulation Z (the Truth in Lending Act), the annual percentage rate (APR) of a finance charge includes all of the following components EXCEPT
A. discount points paid by the borrower.
B. broker’s commission.
C. loan origination fee.
D. nominal interest rate.

A

Answer: B. broker’s commission.
Reasoning: Regulation Z requires disclosure of credit costs, but broker commissions are not considered part of the APR.

88
Q

A charge of three discount points on a $120,000 loan equals
A. $450.
B. $3,600.
C. $4,500.
D. $36,000.

A

Answer: B. $3,600.
Reasoning: Discount points are calculated as a percentage of the loan amount.

120,000 × 0.03 = 3,600

89
Q

Which is NOT a secondary market?
A. Fannie Mae
B. Ginnie Mae
C. FHA
D. Farmer Mac

A

Answer: C. FHA.
Reasoning: The FHA insures loans but does not participate in the secondary mortgage market.

90
Q

A developer received a loan that covers five parcels of real estate and provides for the release of the mortgage lien on each parcel when certain payments are made on the loan. This type of loan arrangement is called
A. a purchase money loan.
B. a blanket loan.
C. a package loan.
D. a wraparound loan.

A

Answer: B. a blanket loan.
Reasoning: A blanket loan covers multiple parcels and allows for the release of individual properties as payments are made.

91
Q

A borrower obtains a $100,000 mortgage loan for 30 years at 7½% interest. If the monthly payments of $699.21 are credited first to interest and then to principal, what will be the balance of the principal after the borrower makes the first payment?
A. $99,992.14
B. $99,925.79
C. $99,379.37
D. $99,300.79

A

Answer: B. $99,925.79.
Reasoning: The first payment of $699.21 includes interest (100,000 × 0.075/12 = 625) and principal (699.21 − 625 = 74.21).

Subtracting
74.21 from the principal gives 99,925.79.

92
Q

Using Figure 15.3, what is the monthly interest-rate factor required to amortize a loan at 6¼% over a term of 15 years?
A. 8.51
B. 8.57
C. 6.16
D. 6.24

A

Answer: B. 8.57.
Reasoning: According to the table in Figure 15.3, the factor for 6¼% interest over 15 years is 8.57 per $1,000 of loan.

93
Q

Using Figure 15.3, calculate the principal and interest payment necessary to amortize a loan of $135,000 at 7¾% interest over 15 years.
A. $1,111.85
B. $1,270.35
C. $1,279.80
D. $1,639.16

A

Answer: C. $1,279.80.
Reasoning: The factor for 7¾% interest over 15 years is 9.48. Multiply this by
135 (thousands)
135 × 9.48 = 1,279.80.

94
Q

Helen borrowed $85,000, to be repaid in monthly installments of $509.62 at 6% annual interest. How much of her first month’s payment was applied to reducing the principal amount of the loan?
A. $8.46
B. $84.62
C. $4.25
D. $42.50

A

Answer: B. $84.62.
Reasoning: First calculate interest
(85,000 × 0.06/12 = 425).

Subtract this from the payment:
509.62 − 425 = 84.62

95
Q

If a lender agrees to make a loan based on an 80% LTV, what is the amount of the loan if the property appraises for $114,500 and the sales price is $116,900?
A. $83,200
B. $91,300
C. $91,600
D. $92,900

A

Answer: C. $91,600.
Reasoning: The loan is based on the lesser of the appraised value or sales price.
114,500 × 0.8 = 91,600.

96
Q

A homeowner needs to refinance her home to avoid foreclosure. Although her monthly income is actually $4,000, she tells the loan officer that her income is $4,800 a month so she can qualify for the loan. She is able to persuade a friend at work to verify the higher amount. This is an example of
A. mortgage fraud.
B. predatory lending.
C. identity theft.
D. forbearance.

A

Answer: A. mortgage fraud.
Reasoning: Providing false information to obtain a loan constitutes mortgage fraud, which is illegal.

97
Q

For a financial institution, the Red Flag Rule under FACTA includes all of the following practices EXCEPT
A. identifying a suspicious address.
B. taking planned action upon receiving a consumer credit report containing a fraud alert.
C. detecting unusual account activity.
D. pressuring a borrower to accept a high-risk loan.

A

Answer: D. pressuring a borrower to accept a high-risk loan.
Reasoning: The Red Flag Rule focuses on preventing identity theft and fraud, not borrower coercion.

98
Q

A VA loan
A. is available to veterans or qualifying spouses only.
B. is qualified by the U.S. Department of Veterans Affairs.
C. requires a minimum 3.5% down payment.
D. equals the contract sales price.

A

Answer: A. is available to veterans or qualifying spouses only.
Reasoning: VA loans are specifically for veterans, active military, and qualifying spouses, offering favorable terms.

99
Q

Which term, when used alone, is acceptable under TIL advertising rules?
A. Amount of down payment
B. Number of payments
C. Monthly payment
D. Selling price

A

Answer: D. Selling price.
Reasoning: Under Regulation Z, terms like “selling price” can be used alone without triggering additional disclosure requirements.

100
Q

A promissory note
A. is a negotiable instrument.
B. may not be sold by the lender to a third party.
C. is recorded in the county clerk’s records.
D. is security for the loan.

A

Answer: A. is a negotiable instrument.
Reasoning: A promissory note is a written promise to repay a debt and can be transferred or sold to another party.

101
Q

The person who obtains a real estate loan and signs a mortgage (deed of trust) is called
A. the trustee.
B. the beneficiary.
C. the mortgagee.
D. the mortgagor.

A

Answer: D. the mortgagor.
Reasoning: The mortgagor is the borrower who pledges the property as security for the loan.

102
Q

The Escalantes sold their farmland to the Crawfords but retained the rights to and ownership of all coal and other minerals in the land. The Crawfords obtained a mortgage loan from their bank and executed a mortgage to the bank as security. Which statement is TRUE regarding this transaction?
A. The Crawfords’ mortgage covers the land and the minerals.
B. The Crawfords’ mortgage covers the land but not the minerals.
C. The Crawfords’ mortgage covers only the minerals.
D. If the Crawfords default, the bank automatically acquires the mineral rights.

A

Answer: B. The Crawfords’ mortgage covers the land but not the minerals.
Reasoning: Retained mineral rights are excluded from the mortgage since they are not part of the property being financed.

103
Q

The lender under a deed of trust is known as
A. the trustor.
B. the trustee.
C. the beneficiary.
D. the vendee.

A

Answer: C. the beneficiary.
Reasoning: The lender is the beneficiary in a deed of trust, holding the benefit of the loan.

104
Q

A borrower obtains a $76,000 mortgage loan at 11½% interest. If the monthly payments of $785 are credited first on interest and then on principal, what will the balance of the principal be after the borrower makes the first payment?
A. $75,215.00
B. $75,943.33
C. $75,543.66
D. $75,305.28

A

Answer: B. $75,943.33.
Reasoning: Interest for the first month is
76,000 × 0.115 / 12 = 728.33.

Subtract this from the payment (785 − 728.33 = 56.67) to get the principal reduction.

Subtracting
56.67 from the loan balance gives
75,943.33.

Real Estate Principles (18 decks)

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