Real Estate Prep Exam part 2

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: All of the above

A: A homeowner's financial interest is called his equity. It is the difference between fair market value and what is still owed on the mortgage and any other liens.

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

A: 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.

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

A: A normal contingency in a sales contract would be that 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.

A promissory note is A: A written promise to repay a specific amount over a specific period of time B: An oral promise to repay a specified amount over a specified period of time C: A note passed back in fourth in class D: A note you deliver to another telling them of your intentions

A: A promissory note is a written promise to repay a specific amount over a specified period of time.

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 negotiates and transacts the sale of real estate but is not licensed D: A person who sells both property and insurance

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

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

A: A second mortgage is a mortgage with a lien position subordinate to the first mortgage.

The right of a 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: Governmental domain C: Encroachment D: Both A and B

A: Eminent domain is the right of the government to take private property for public use upon payment of its fair market value

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 if key available at most hardware stores

B: A lock-in is a rate guaranteed by the lender for a certain period of time at a certain cost to the buyer.

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

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

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

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

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

B: Failure to make the mortgage payment within a specified period of time, usually 30 days for first mortgage or first trust deeds, causes the loan to be in default.

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

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

You and 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

B: In the event of death in joint tenancy, the survivor owns the property in its entirety.

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 their seller assumes the buyer's mortgage D: All of the above

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

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

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

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

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

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

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

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

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

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

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

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

C: The person to whom an interest in real property is conveyed is the grantee

Which of the following best describes a "broker"? A: Someone who owns a real estate firm B: some real estate agents working for a broker 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

D: 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.

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

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

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: Personal affidavit B: Credit card history C: Savings account history D: Credit report

D: A report of an individuals credit prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness is called a credit report.

A term by appraisers to estimate the physical condition of a building it may be different from the buildings actual age: A: Estimated age B: Longevity C: Preferred age D: Effective age

D: 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.

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

D: Them 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.