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33 Cards in this Set

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  • Back
Under an installment contract, the title to the property is held by the

a. vendor
b. vendee
c. trustor
d. trustee
a. vendor
A land contract provides for the

a. sale of unimproved land only
b. sale of real property under an option agreement
c. conveyance of legal title at a future date
d. immediate transfer of reversionary rights
c. conveyance of legal title at a future date
The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is the

a. amortization ration
b. loan-to-value ratio
c. debt-to-equity ratio
d. capital-use ratio
b. loan-to-value ratio
The purpose of the Real Estate Settlement Procedures Act (RESPA) is to

a. see that buyers do not borrow more money that they can repay
b. make real estate brokers more responsive to the needs of buyers
c. help sellers know how much money is required to purchase the property
d. see that buyers and sellers know all of their settlement costs
d. see that buyers and sellers know all of their settlement costs
A building was sold for $115,000. Earnest money in the amount of $15,000 was deposited in escrow, and the buyer obtained a new loan for the balance of the purchase price. The lender charged two discount points on the loan. What was the total amount of cash used buy the buyer for this purchase?

a. $2,300
b. $15,000
c. $17,000
d. $17,300
c. $17,000
The seller agrees to sell the house to the buyer for $100,000. The buyer was unable to qualify for a mortgage loan for this amount so the seller and buyer enters into a contract for deed. The interest the buyer has in the property under a contract for deed is

a. legal title
b. equitable title
c. joint title
d. mortgagee in possession
b. equitable title
Mortgage lenders want assurance that future real estate taxes will be paid. The most common way to do this is to require the borrower to

a. obtain title insurance
b. sign a note
c. pay into an impound account
d. submit paid tax receipts
c. pay into an impound account
When real estate is sold under an installment land contract and the buyer takes possession of the property, the legal title

a. is subject to a purchase money mortgage
b. must be transferred to a land trust
c. is kept by the seller until the purchase price is paid according to the contract
d. is transferred to the buyer
c. is kept by the seller until the purchase price is paid according to the contract
Which of the following is true about an installment contract (land contract)?

a. the buyer is given possession
b. the seller delivers a deed to the buyer
c. the buyer obtains a mortgage loan
d. the seller delivers legal title to the buyer
a. the buyer is given possession
If a buyer obtains a $50,000 mortgage with 4 points, how much will the lender charge at closing

a. $6,000
b. $200
c. $2,000
d. $40,000
c. $2,000
The Truth-in-lending Law, implemented by Regulation Z, sets forth certain requirements regarding real estate loans to individuals for all of the following purposes EXCEPT loans for

a. household use
b. business use
c. room additions
d. swimming pools
b. business use
An FHA-insured mortgage loan would be obtained from which of the following?

a. The Federal Housing Administration
b. The Department of Housing and Urban Development
c. Any qualified lending institution
d. Any qualified insuring institution
c. Any qualified lending institution
An eligible veteran made a purchase offer of $80,000 on a home he wants to finance with a VA-guaranteed loan. Four weeks after the offer was accepted, a certificate of reasonable value (CRV) for $77,000 was issued for the property. In this situation, any of the following could occur EXCEPT the veteran may

a. withdraw from the transaction without penalty
b. purchase the property with a $3,000 cash down payment
c. negotiate with the seller to reduce the price $3,000
d. borrow the $3,000 for the cash down payment
d. borrow the $3,000 for the cash down payment
An extension of credit from a seller to a buyer to allow the buyer to complete the transaction is called a

a. growing equity mortgage
b. purchase money mortgage
c. package mortgage
d. blanket mortgage
b. purchase money mortgage
When compared with a 30-year payment period, taking out a loan with a 20-year payment period would result in all of the following EXCEPT

a. faster amortization
b. higher monthly payments
c. quicker equity buildup
d. greater impound amounts
d. greater impound amounts
If the interest rate on an FHA-insured mortgage loan is 11 1/2 percent and the monthly payment is $1,412, the principal sum would be

a. $12,278
b. $147,339
c. $162,383
d. $194,561
b. $147,339
Regulation Z applies to

a. business loans
b. real estate sales agreements
c. commercial loans under $10,000
d. personal credit transactions under $25,000
d. personal credit transactions under $25,000
The type of mortgage loan that uses both real and personal property as security is a

a. blanket mortgage
b. package mortgage
c. purchase money mortgage
d. wraparound mortgage
b. package mortgage
If a house sold for $80,000 and the buyer obtained a loan for $72,000, how much money would the buyer pay if the lender charged 3 points?

a. $2,400
b. $2,300
c. $2,160
d. $240
c. $2,160
a mortgage loan requires monthly payments of $175.75 for 20 years and a final payment of $5,095. This type of a mortgage loan is a(n)

a. wraparound mortgage
b. accelerated mortgage
c. balloon mortgage
d. variable mortgage
c. balloon mortgage
In sale-and-leaseback arrangement the

a. seller retains legal title to the real estate
b. buyer becomes the lessee
c. broker will not earn a commission
d. buyer becomes the lessor
d. buyer becomes the lessor
Mrs. D has owned her house for over 50 years. It has fallen into disrepair but, because she lives on a fixed income, she does not have the money to make the needed repairs. She has a considerable amount of equity in the house. What type of loan best suits her needs?

a. a home equity loan
b. a reverse annuity mortgage
c. a blanket loan
d. an open-ended loan
b. a reverse annuity mortgage
The type pf loan that will most likely have the lowest loan-to-value ratio is a

a. VA loan
b. FHA loan
c. PMI loan
d. conventional loan
d. conventional loan
A lender may protect its interest in a mortgage loan by obtaining additional security from

a. private mortgage insurance
b. title insurance
c. the borrower’s note
d. escrow accounts
a. private mortgage insurance
A lender will take certain factors into consideration when deciding whether to grant a borrower a mortgage loan. All of the following are legitimate factors EXCEPT

a. the marital status of the borrower
b. the creditworthiness of the borrower
c. the amount of the borrower’s income
d. the ability of the borrower to make the payments
a. the marital status of the borrower
One of the ways lenders increase their revenue is by servicing loans. All of the following are activities of servicing loans EXCEPT

a. collecting payments
b. paying real estate taxes from escrow accounts
c. renegotiating interest rates
d. sending overdue notices
c. renegotiating interest rates
Which of the following ways to advertise loan terms is legal?

a. $499 per month
b. $1,000 down
c. 8 percent interest rate
d. assumable mortgages
d. assumable mortgages
A developer had a mortgage loan on his entire housing development. When he sold a lot to a buyer, he was able to deliver title to that lot free of the mortgage lien by obtaining a partial release. What type of loan did the developer have?

a. blanket mortgage
b. purchase money mortgage
c. package mortgage
d. open-end mortgage
a. blanket mortgage
The selling price of a property is $96,000. This can be financed if the buyer can put 10 percent down and pay a loan origination fee of 1.5 percent. How much cash must the buyer produce to complete this transaction?

a. $10,080
b. $10,896
c. $11,040
d. $11,084
b. $10,896
The buyer of a $125,000 home has paid $2,000 as earnest money and has a loan commitment for 70 percent of the purchase price. The balance of the cash the buyer needs to complete the transaction is

a. $3,500
b. $35,500
c. $37,000
d. $37,500
b. $35,500
The grantor becomes the lessee and the grantee becomes the lessor under which of the following financing arrangements?

a. partial sale
b. wraparound mortgage
c. sale and leaseback
d. assumption of mortgage
c. sale and leaseback
Which of the following pairs of terms is considered synonymous?

a. interim financing and construction loan
b. construction loan and pass-through loan
c. pass-through loan and take-out loan
d. take-out loan and construction loan
a. interim financing and construction loan
The type of real estate loan that allows the lender to increase the outstanding balance of a loan up to the original sum in the note while advancing additional funds is the

a. wraparound mortgage
b. open-end mortgage
c. growing-equity mortgage
d. reverse annuity mortgage
b. open-end mortgage