Real Estate Finance

A final payment on a loan that was larger than the previous payments would be called a(n):

A ballon payment

A mortgagee foreclosed but the sale did not produce enough to pay all debts. Which of the following is the MOST likely course of action for the mortgagee to take?

File for a judgment lien against the borrower

In a contract for deed, when does the buyer obtain legal title?

When the contract terms are satisfied

A land contract is also referred to as a(n):

installment contract

A buyer obtained a 10% interest rate loan in the amount of $90,000. The term of the loan was 30 years and the monthly payment of principal and interest was $789.81. How much of the first month's payment will be paid on the principal?

$ 39.81, $90,000 X 10% = $9,000 (int/yr) / 12 months = $750 (int/mo); $789.81 (P&I) - $750 (int) = $39.81 (principal).

A buyer purchased a house obtaining a new loan with a 70 to 30 loan to value ratio. The annual interest rate was 9 3/4%. The first month's interest was $583.33. What was the sale price of the house?

$102,564, $583.33 (int/mo) X 12 months = $6,999.96 (int/yr) / 9.75% = $71,794.46 (loan); $71,794.46 (loan) / 70% = $102,563.52

A property was purchased for $92,000 putting $11,000 down. A few years later, the property appraised for $116,000 while the loan balance was down to $79,000. What is the owner's equity in the property?

$116,000 - $79,000 = $37,000 of equity.

A buyer obtained a $60,000 loan at 11% interest for 30 years, with monthly principal and interest payments of $571.39. What was the total amount of interest paid over the 30 year term?

$145,700, $571.39 (P&I/mo) X 12 months X 30 years = $205,700.40 (P&I paid over 30 years); $205,700.40 (P&I) - $60,000 (principal paid back) = $145,700.40 (interest paid)

A person obtained a $15,000 term loan at an 11% annual interest rate. If the loan was repaid in a single payment after 18 months, what would be the total amount of the payment?

$17,475, $15,000 (loan) X 11% = $1,650 (interest/year). $1,650 / 12 months = $137.50 (interest/mo). $137.50 X 18 (months = $2,475 (interest. $2,475 (interest) + $15,000 (principal) = $17,475 (total paid back).

A buyer took out a $6,000 loan for 10 years at 10.5% interest. The buyer made principal payments of $75 a month on the loan in addition to interest. What would be the principal loan balance after 6 months of payments?

$5,550, Each month the loan balance was reduced by $75. $75 X 6 months = 450 (total principal paid over the six months). $6,000 (original loan) - 450 (paid on principal) = $5,550 (loan balance).

A buyer purchased a property for $130,000 putting 20% down. The buyer also immediately took out a $10,000 home equity loan. Five years later, the home has a current value of $175,000 while the home equity loan is down to a balance of $4,500 and the first mortgage has a current balance of $98,000. What is the seller's equity in the property?

$72,500, $175,000 - $4,500 - $98,000 = $72,500

How many days does a lender have from the time of receipt of loan application to give to the buyer an estimate of closing costs (The Loan Estimate)?

3 Days, Under the TILA-RESPA Integrated Disclosure Rules (TRID), a lender must give to the borrower an estimate of closing costs (The Loan Estimate) within 3 days of receipt of loan application.

A house sold for $39,379. The buyer paid 20% down. Monthly interest on the loan was $229.69. What was the annual interest rate on the loan?

8 3/4%, $39,379 (sale price) X 80% (loan) = $31,503.20 (loan amount). $229.69 (int./mo) X 12 months = $2,756.28 (interest/year). $2,756.28 / $31,503.20 = 8.75%.

Which of the following loans would fall under the three-day right of rescission allowed under Regulation Z?

A home improvement loan for a principal residence

The Equal Credit Opportunity Act prohibits discrimination based on:

A persons age cannot be used for discrimination in making a loan, assuming the person is of legal age.

Which of the following liens would take priority getting paid off at a foreclosure sale?

A real estate tax lien, Real estate taxes always take priority getting paid off at a foreclosure sale.

A loan for which of the following transactions would be covered under Regulation Z?

A residential home purchased with a loan of $185,000, Regulation Z applies to residential loans.

At the end of the loan term, an amortized note left a loan balance to be paid off. Which of the following terms BEST describes this type of note?

Balloon

A loan was amortized for a 30 year period. If the remaining loan balance was due at the end of 7 years, this is BEST described by which of the following terms?

Balloon payment

A property was sold in a state using a trust deed as the form of security. Who benefits MOST from the holding of the trust deed?

Beneficiary

Which instrument indicates involuntary alienation?

Deed in foreclosure

What type of interest does the buyer receive in the property after the seller accepts the offer?

Equitable

A property appraised for $42,000. If the buyer borrowed $28,000, what is the difference between the two amounts called?

Equity

Which of the following is an example of involuntary alienation?

Foreclosure

Which of the following best describes a term loan?

Interest only, In a term loan, the borrower keeps the principal amount of the loan for the entire term; thus paying interest only during the term of the loan and paying the loan off in a balloon payment at the end. In a reverse annuity mortgage the lender pays monthly payments to an owner (usually older) and then is repaid at some future date

Which of the following liens would take priority over all others?

Real estate tax lien

Who oversees and administers the provisions of the Real Estate Settlement Procedures Act (RESPA)?

The Consumer Financial Protection Bureau (CFPB) replaced Housing and Urban Development (HUD) for overseeing the RESPA guidelines.

A person was applying for a new VA loan on a single family home purchase. Which federal law was passed to ensure the buyer received disclosure of the total closing costs?

The TILA-RESPA Integrated Disclosure Rules (TRID), The TILA-RESPA Integrated Disclosure Rules (TRID) requires disclosure of the initial estimate of buyers closing costs (The Loan Estimate) within 3 days of receipt of loan application. Also, TRID requires the disclosure of the final actual closing costs (The Closing Disclosure) for both seller and buyer to be delivered no later than 3 business days before consummation (closing).

A buyer obtained a $50,000 loan with a 9% interest rate. The loan was amortized over 30 years with a monthly payment of $403. Which of the following statements is true?

The amount of principal in the first month's payment was $28.00

Which of the following would allow a lender to legally reject a loan for a residential house that was in good repair?

The house was located in an area primarily used for light industrial

Which of the following statements is true regarding security for a debt?

The mortgage secures the note

In foreclosure, after the mortgage and all other debts are paid, to whom would the excess go?

The owner who was foreclosed upon

Which of the following statements would be true of a partially amortized loan?

There are generally smaller monthly payments

Which of the following is NOT contained in a note?

Title insurance

Truth-In-Lending Laws are also referred to as:

Truth-In-Lending laws are also called Regulation Z.

A lender charging an interest rate that is higher than allowed by laws would be violating:

Usury Law, Usury laws set the maximum interest rate that can be charged by law.

In a contract for deed, when does the buyer receive the deed to the property?

When the payment obligation is paid in full

A mortgage where the interest rate is subject to adjustments periodically is:

adjustable rate

A loan where each payment makes contributions toward principal and interest is a(n):

amortized loan, An "amortized" loan has payments going to interest and principal. A "straight loan"

A mortgage in which the payments apply to both principal and interest is BEST referred to as:

amortized mortgage

The payment on a graduated payment mortgage usually has gradual increases:

and then levels out for the remainder of the term

Usury laws are designed to protect the:

borrower

A buyer wanted to purchase a property from a seller and assume the FHA loan on the property. The buyer, however, did not have enough money to assume the loan and make the down payment on the property. The buyer agreed to make equal monthly payments to the seller for one year for the down payment. This type of financing would be called a:

contract for deed

A foreclosure on a property is taken by:

court action

A lender is going through the foreclosure process. The lender, however, would like to resell the property as soon as possible. The lender should seek a:

deed in lieu of foreclosure, A deed in lieu of foreclosure allows the lender to forego the foreclosure process and receive the deed to the property from the buyer. This is the quickest way for the lender to receive title to the property and resell.

A borrower does not meet all the obligations of the mortgage agreement. This is usually referred to as being in:

default

A property was sold by a foreclosure sale. The sale did not produce enough money to satisfy all the debts on the property. What could the creditors who weren't paid now file?

deficiency judgment, A deficiency judgment can sometimes be filed against the defaulting borrower for any debts not satisfied by the foreclosure sale.

The right of a defaulting borrower to retain title to a property by satisfying the debt prior to the foreclosure sale is referred to as:

equitable redemption

The value of a property over and above all outstanding debts is called:

equity

A mortgage is recorded to protect the:

mortgagee

An amortized note left a loan balance to be paid off at the end of the term. This would be called a(n):

partially amortized note

A lender had to foreclose on a property. When the lender resold the property, the lender used a quitclaim deed. The purpose of this was to:

prohibit any future title claims against the lender

A written document that is used to promise repayment of a loan is called a:

promissory note

In order to have a valid mortgage, there must be a(n):

promissory note and mortgage document

The right of a person to regain title to property after paying all debts is known as:

redemption, Redemption is the right to "buy back" your property from whoever bought it at a foreclosure sale. Release

The primary purpose of a mortgagor giving a mortgage to the mortgagee is to:

secure the debt,

In a land contract or contract for deed, the seller who retains the fee simple title is referred to as the:

vendor