Principles.of Real Estate 2
A loan with an interest rate tied to a readily available index - the rate will be adjusted periodically causing payment changes
Adjustable Rate Mortgage (ARM)
An appraiser's opinion of value
Appraisal
What helps overcome the difficulties of objectively estimating the value of properties?
Appraisals
The ______ is the sum of regular debt plus the house payment.
Back Ratio
Mortgage that covers more than one piece of property?
Blanket Mortgage
The market in which ______ and mortgage _______ come together to create and negotiate terms of a mortgage transaction is called the primary mortgage market.
Borrowers, lenders
Mortgage where monthly house payment includes principal, interest, taxes nd insurance (PITI)
Budget Mortgage
A _____ is an area of land separating one land use from another, such as residential from commercial.
Buffer Zone
Interest rate a Reserve Bank charges eligible financial institutions to borrow funds on a short-term basis
Discount Rate
The right of the government to take private land for public use
Eminent Domain
The Energy Star program is focused primarily on
Energy Efficiency
The right of the government to take an individual's land if he or she dies without a will or heirs
Escheat
_____ is the process of transferring real estate to the state when a person dies intestate (without a will) and without heirs.
Escheat
The loss in value of a property caused by factors outside of the property itself
External Obsolescence
What do Government loans include?
FHA, VA, USDA
T/F Most lenders, especially for conforming loan programs, do not normally conduct simple desk reviews at their desks.
False
T/F A field review, which has an exterior only, or drive-by, inspection is deemed acceptable for low LTV or low-risk loans.
False
T/F Condemnation is the right of the government to take private land for public use.
False
T/F Deed restrictions and CC&Rs are usually not permanent and in most cases, expire after the passage of 20 years.
False
T/F Deterioration is the reduction in value of property from causes such as deterioration or obsolescence
False
T/F External obsolescence is the loss in desirability of the style, layout, or function of an element of a property over time.
False
T/F Functional Obsolescence refers to the loss in value of a property caused by factors outside of the property itself
False
T/F If the proposed use of property violates zoning, the owners must request a permit which is permission to bend the rules.
False
T/F Market value is not one of the concepts that are typically misunderstood in an appraisal.
False
T/F The 3 approaches to value are the sales comparison approach, the cost approach and capitalization
False
T/F The ENERGY STAR program is operated by the U.S. Department of Justice (DOJ).
False
T/F The principle of conformity suggests that the value of a property is equal to the sum of the contributory value of each of its component parts
False
T/F There is a five-year right of redemption for homestead property sold at a tax auction in Texas
False
T/F Under the Toxic Substances Control Act of 1976, the TCEQ is given the authority by the Federal Government to require record-keeping, testing, reporting, and regulation of certain substances.
False
Ordered by lenders when dealing with high-LTV loans
Field Review
The legal procedure under which property may be sold to satisfy an unpaid promissory note
Foreclosure
Conventional conforming loans most conform to the standards of ____ and _____.
Freddie Mac, Fannie Mae
The ________is the house payment as a percentage of income.
Front Ratio
Loss in the desirability of style, layout or function of an element of a property over time
Functional Obsolecence
A residential heating system featuring steam radiators may adequately warm the rooms, but buyers today prefer heating methods that are less obvious and take up less space, is an example of what?
Functional Obsolescence
Refers to the loss in desirability of the style, layout, or function of an element of a property over time
Functional obsolescence
What types of depreciation are there?
Physical Depreciation, Functional Obsolescence, External Obsolescence
Loss in a property's value due to daily wear and tear
Physical Deterioration
The right of the government to regulate and control the way that an individual uses his or her land.
Police Power
The market in which borrowers and lenders come together to create and negotiate the terms of a mortgage transaction
Primary mortgage market
Value is maximized when there is a reasonable degree of homogeneity or sameness in a neighborhood
Principle of Conformity
The value of a commodity is influenced by the cost of acquiring a substitute or comparable item
Principle of Substitution
States that purchase price is affected by the expectation of future appeal and benefits
Principle of anticipation
The value of a subject property is increased by the value of surrounding properties
Principle of progression
_________ is a special form of insurance designed to allow lenders to increase the LTV ration. a) Errors and Omissions Insurance b) Liability Insurance c) Mortgage Insurance Premium d) Private Mortgage Insurance
Private Mortgage Insurance (PMI)
What elements are needed for a credit application to be complete?
Property Address, Estimated Value, Name of the borrower, Social Security Number, Income, Loan Amount
The government's right to tax real estate
Taxation
The ______ is an agency responsible for affordable housing as well as the regulation of the state's manufactured housing industry. a) Texas Real Estate Commission b) Texas Department of Insurance c) Texas Department of Housing and Community Affairs d) Texas Realtors
Texas Department of Housing and Community Affairs
T/F Fannie Mae and Freddie Mac have been instrumental in standardizing residential appraisal reporting through the widespread adoption of the Uniform Residential Appraisal Report.
True
T/F A greyfield describes land containing abandoned structures that are available for redevelopment
True
T/F Appraisals are a critical part of any transaction where financing is involved because lenders use them to determine the market value of the property being used to secure the loan.
True
T/F Chronological age is the actual age of the property in years.
True
T/F GRM = Sales Price / Monthly Rate
True
T/F Price does not equal value.
True
T/F Reconciliation is the final step in the appraisal process
True
T/F The Interstate Land Sales Full Disclosure Act is currently administered by the Consumer Financial Protection Bureau (CFPB).
True
T/F The appraiser will gather at least 3 comparison sales known as "comparable"
True
T/F The comparable sale can differ from the subject property in 2 ways. It can have features that are superior or inferior.
True
T/F The loan-to-value ration (LTV) is the percentage of value or sales price that a lender is willing to finance
True
T/F The principle of anticipation states that the purchase price is affected by the expectation of future appeal and benefits
True
T/F The value of a property may be affected by social, economic, governmental and environmental influences
True
T/F There are three phases of an environmental site assessment
True
T/F Title to land in the United States can be traced back to its original owner, which is referred to as the sovereignty of the soil.
True
The Energy Star program is operated by the
U.S. Department of Energy (DOE)
Fannie Mae Form 1004
URAR
The ____ offers 100% financing for rural loans for first time and repeat home buyers' primary residences.
USDA
Standard that have been established by the Appraisal Standards Board of the Appraisal Foundation
USPAP
The process of making a lending decision
Underwriting
A(n) ______ is a loan that is guaranteed by the government.
VA Loan
Does not always equal price
Value
If the loan limits the loan-to-value ratio to a maximum of 90% and the appraised value of the home is $100,000, what is the maximum loan amount permitted under the program?
$90,000
A loan with an adjustment period of 1 year is called a?
1-year ARM
If the lender uses an index that currently is 1.50% and adds a 2.50% margin, what would the fully indexed rate be?
4.00%
According to value
Ad Valorem
Which of the following federal laws was passed to ensure the banks would serve the needs of the community in which they were chartered to do business? a) Truth in Lending Act b) Regulation Z c) Equal Opportunity Credit Act d) Community Reinvestment Act
Community Reinvestment Act (CRA)
A ______ loan refers to a loan made with real estate as security and which does not involve government participation in the form of insuring or guaranteeing the loan.
Conventional
What 2 broad categories are residential mortgages divided into?
Conventional, Government loans
What is a good acronym to remember characteristics of property value?
DUST
What are the four characteristics of property value?
Demand, Utility, Scarcity, Transferability
Reduction in the value of a property due to deterioration or obsolecence
Depreciation
______ loans are divided into 3 categories: FHA, VA, and USDA.
Government
______ loans are divided into three categories: FHA, VA, and USDA
Government
The legal use that gives the greatest return in money and/or amenities
Highest and Best Use
The legal use for property that gives the greatest return in money and/or amenities
Highest and best use
Instrument lender uses for measuring changes in interest rates
Index
Percentage of value or sales price that a lender is willing to finance
Loan-to-value ratio
Percent added to the index in order to calculate the payment interest rate
Margin
Sales Comparison Approach is also known as
Market Data Approach
The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale
Market Value
The price a willing seller will sell for, and the price a willing buyer will pay
Market Value
The process of creating a new mortgage loan
Origination
The process of creating a new mortgage loan, including all steps taken by a lender to attract and qualify a borrower, are considered ______ activities.
Origination
What acronym is helpful to remember the elements that make a credit application complete?
PENSIL
Mortgage that includes both real and personal property (Fixtures and Furnishings)
Package Mortgage
The practice of refusing to provide financing in a particular location
Redlining
The approach used as the best indicator of value for existing properties
Sales Comparison
What are the 3 approaches to value?
Sales Comparison Approach, Cost Approach, Income Approach
If a type of property in a market area is too abundant, it has reduced value
Scarcity
Title to land in the United States can be traced back to its original owner
Sovereignty of the Soil
The percentage of value to sales price that a lender will lend is known as the _______ ratio.
loan-to-value
