Real Estate Financing and Settlement Practice Exam

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• What must sellers disclose about their property?
• What is a convertible mortgage?
• Which type of loan is incompatible with an alienation clause?
• What term describes the act of charging an illegal rate of interest?
• What does a buyer need to assess when purchasing investment property?
• What does fair market value refer to?
• What constitutes the front-end ratio in the context of mortgage qualification?
• What characterizes a leaseback arrangement?
• What does the deed of reconveyance signify?
• What is a common benefit of a wraparound mortgage?
• What is the significance of the loan-to-value ratio?
• What is a real estate investment trust (REIT)?
• What financial advantage does a wraparound loan provide to the seller?
• Which type of mortgage allows homeowners to receive monthly payments while borrowing against their home equity?
• Which type of property is exempt from Foreign Investment in Real Property Taxes Act withholding?
• What does the back-end qualifying ratio account for?
• What is a “balloon payment” in the context of loans?
• What does "margin" refer to in mortgage financing?
• What happens to junior liens during a foreclosure process?
• Who benefits from a subordination clause in a seller-carrying mortgage?
• What is the primary source of funds for loans made by commercial banks?
• What is the primary role of a real estate appraiser?
• What role does MERS perform in the mortgage process?
• What role does a FICO score play in real estate financing?
• In an adjustable-rate mortgage, the amount paid above the index rate is known as?
• What characterizes a seller's market in real estate?
• What is the main financial advantage of a straight note for a borrower?
• How might a conditional use permit affect property value?
• What is the aim of title insurance?
• Which feature is NOT characteristic of a qualified mortgage?
• Why is RESPA important in real estate transactions?
• Which type of lender typically uses its own funds to fund loans sold in the secondary mortgage market?
• What factors can influence mortgage interest rates?
• What must a buyer seek if a seller's existing loan has an alienation clause?
• In a reverse-annuity mortgage, how do owners access funds?
• What does "bare legal title" refer to?
• What is considered investment property?
• What does a home warranty typically cover?
• What is a deficiency judgment?
• What does RESPA stand for?
• What is the primary purpose of the Service Members Civil Relief Act regarding mortgages?
• A straight or term loan requires the borrower to pay which of the following?
• What is PMI and when is it required?
• What does the acronym HELOC stand for?
• What document is given when a deed of trust has been paid off?
• Which loan type typically requires no down payments?
• What type of properties would likely be subject to a property tax lien?
• Who is responsible for paying the commission in a real estate transaction with an exclusive right-to-sell listing?
• What does a “lease option” allow a tenant to do?
• What is the primary role of a settlement agent in real estate transactions?
• What type of lender provides loans to borrowers with poor credit histories?
• What happens when a buyer participates in a buydown?
• What does a mortgage broker primarily do?
• What is the primary purpose of title insurance?
• What is the term for paying extra points to reduce the interest rate on a mortgage?
• In a reverse mortgage, when is the loan typically repaid?
• In real estate, what does "equity" represent?
• In the context of real estate transactions, what does a seller gain from a leaseback arrangement?
• What practice allows lenders to shorten the loan processing time without needing FHA approval?
• What is one of the roles of the Consumer Financial Protection Bureau (CFPB) in real estate financing?
• What does LTV stand for in the context of real estate financing?
• What is an example of an open market transaction conducted by the Federal Reserve?
• How does the Federal Reserve influence mortgage interest rates?
• What is an interest rate lock?
• What is a quiet title action?
• Why is understanding fair market value important for buyers?
• In an adjustable rate mortgage, what dictates the changes in interest rates?
• What is the term used for a lender's ability to determine if a loan qualifies for FHA insurance?
• What does "pre-approval" mean in the mortgage process?
• Which type of loan generally offers 100% financing for a home purchase?
• What is a wraparound mortgage?
• What does the back-end ratio include in mortgage qualification?
• What is the primary goal of a quiet title action?
• Which of the following best describes a mortgage?
• What are "points" in real estate financing?
• Who signs the deed of reconveyance when a trust deed has been paid off?
• What is the purpose of a property inspection?
• What does negative amortization indicate regarding a loan?
• What does loan modification typically aim to achieve for borrowers?
• In mortgage financing, what does a buydown accomplish?
• What characterizes a conventional loan?
• Which loan type allows a borrower to increase the loan amount up to a determined limit?
• What are the three parties involved in a trust deed?
• What is an adverse effect of a low FICO score for borrowers?
• What is the primary purpose of a mortgage?
• What is a foreclosure in real estate?
• What feature does a convertible ARM (Adjustable Rate Mortgage) offer the borrower?
• What often leads to a denial of a loan application?
• What happens to a loan in negative amortization?
• What is the purpose of a FICO score?
• What happens to the principal amount of an amortized loan over time?
• What is the minimum number of days a homeowner must be delinquent before a foreclosure notice can be issued?
• What is a potential advantage of a land contract for a buyer compared to a conventional mortgage?
• What is the primary purpose of real estate syndication?
• What financial solution could help an elderly couple who owns their home free and clear but struggles with expenses?
• What act protects reservists called to active military duty from foreclosure on their mortgage according to the provided information?
• What does a property inspection typically look for?
• Who acts as a middleman between borrowers and lenders?
• In a packaged mortgage, which of the following is typically covered?
• What are closing costs in a real estate transaction?
• What does MERS stand for in real estate financing?
• What does a lender's extended coverage title policy protect?
• Which legal code stipulates the recording of a financing statement to establish a lien on personal property?
• How is the front-end ratio calculated?
• What are the possible implications of a loan default?
• In a financing agreement for personal property, what is recorded to create a lien?
• What does “deed in lieu of foreclosure” entail?
• What does a defeasance clause in a mortgage provide for?
• What financial structure allows a seller to retain an existing loan while providing financing to a buyer?
• What is a conditional use permit in zoning regulations?
• How does actual cost differ from appraised value?
• How is the back-end qualifying ratio often expressed?
• What might trigger the need for a loan modification?
• Who ultimately owns the funds in an impound account?
• What is NOT true about a VA loan?
• In a wraparound mortgage, which of the following is true?
• How is escrow defined in real estate transactions?
• What role does the trustor play in the deed of trust transaction?
• What constitutes total monthly housing costs in calculating the front-end ratio?
• Why might a lienholder refuse a deed in lieu of foreclosure?
• What factor contributes to subprime lenders charging higher interest rates?
• What is the key function of the Federal Reserve regarding government securities?
• What is the purpose of real estate disclosure?
• Who is responsible for controlling monetary policy in the United States?
• Which entity typically insures FHA loans?
• Which financial metrics are affected by a buyer's FICO score?
• What is the primary responsibility of a real estate attorney?
• What are “contingencies” in a real estate contract?
• What does the debt-to-income ratio assess?
• What is the primary purpose of a mortgage broker?
• When borrowing against personal property, what document does the borrower sign to secure the loan?
• Which professional is responsible for determining the risk of a mortgage loan?
• What is the primary role of points in relation to loan financing?
• What does the acronym PITI stand for in mortgage terminology?
• What is commonly true about the down payments in land contracts compared to conventional mortgages?
• How does zoning influence real estate?
• Which professional is compensated for arranging a loan but does not service it?
• Who typically determines the appraised value of a property?
• What is the primary goal of refinancing a mortgage?
• How does a buydown affect monthly payments?
• In real estate, what does the term 'alienation clause' refer to?
• What does a property tax lien represent?
• In an amortized loan, what happens to the interest portion of monthly payments over time?
• What does a deed of trust primarily represent in a real estate transaction?
• How does a mortgage broker assist borrowers?
• What kind of loans does a FICO score primarily help to assess?
• If a home sells for $142,000 and the lender charges 1.75 points for an 80% loan, how much does the buyer pay in loan points?
• Which activity is primarily conducted by Fannie Mae?
• When is the borrower responsible for the funds in the impound account?
• What is the responsibility of a trustee in a deed of trust?
• Which index is used to establish a benchmark for adjustable-rate mortgages?
• What does an amortization schedule provide for a loan?
• What is the likely effect of increasing points on a loan without any economic changes?
• What is a key benefit of investment property?
• What type of document shows the transfer of an interest in real property in a transaction involving a new deed of trust?
• What is the primary difference between a deed and a mortgage?
• What distinguishes a fixed-rate mortgage from an adjustable-rate mortgage?
• What protects a tenant in the event of foreclosure?
• What characterizes a "contract for deed"?
• A loan that functions similarly to a line of credit is called what?
• What type of loans meet the underwriting standards of Fannie Mae or Freddie Mac?
• What defines a short sale in real estate?
• In a buydown loan, who typically pays for the discount points?
• What is a major characteristic of a straight note?
• What happens to the legal title when a deed of trust is executed?
• Which two ratios are commonly used for loan qualifying?
• What is a nondisturbance clause?
• After a foreclosure sale, what right does a former owner have regarding the property?
• What does the affordability index measure?
• How does the loan-to-value ratio affect underwriting decisions?
• Which loan type is generally expected to carry the highest initial interest rate?
• What does LTV stand for in real estate financing?
• What is a loan origination fee?
• The higher the LTV (loan to value) ratio, what is affected regarding the buyer?
• What components make up the back-end qualifying ratio for a loan?
• What is an FHA loan?
• In a real estate closing transaction with an exclusive right-to-sell listing, what is the nature of the commission?
• Which type of loan restores the borrower’s benefits upon paying off the loan?
• What is the purpose of an alienation clause in a mortgage?
• Who may offer loans to individuals with poor credit and job history?
• What does underwriting involve in real estate financing?
• What factor is inversely related to the loan to value ratio (LTV)?
• Which of the following is NOT an activity typically associated with Fannie Mae?
• What does a deed of trust transfer from the trustor to the trustee?
• What is the primary purpose of conducting a title search in real estate transactions?
• What is a first-time homebuyer program designed to do?
• What is one benefit of a home warranty for homeowners?
• A packaged mortgage is characterized by which of the following?
• How much notice must a new owner give to a month-to-month tenant if they wish to vacate the property?
• How is the interest on an adjustable rate mortgage typically calculated?
• What is meant by “property appreciation”?