Practice Exam Unit 3 Finance

A buyer with a 20 year, $419,000 loan at 4.25% interest rate has a monthly principal and interest payment totaling $2594.59. If 1004 and $83.95 is interest, how much is applied toward principal for that payment?

$1110.64

Undercurrent tax well, what's the maximum tax free gift an individual can give it to another individual annually?

$15,000

Sophia's annual property taxes are $1295, and her annual insurance premium is $942. How much of her monthly mortgage payment goes toward taxes and insurance?

$186.42

What type of professional must an investor used to conduct a tax deferred exchange?

A Qualified Intermediary

Which of the following provides a summary of the title history?

Abstract of title

Larry is a lender processing a loan application. Which of the following might he request to verify the applicants bank deposit information?

Account statement

Janice is extremely excited to have purchased her first home. She was able to lock in her monthly payment at a very low rate for the first five years. In year six, Janices payments will become significantly larger based on the going market rates. What type of loan does Janice have?

Adjustable Rate Mortgage

One borrowers miss schedule mortgage payments, failed to pay property taxes, or_______, they could face loan default.

Allow the property to go into disrepair.

Which generation are children of the silent generation and products of the US population explosion after world war two?

Baby boomers

Which of the following describes housing ratio?

Calculation of a borrowers monthly housing application, including principal, interest, taxes, insurance, and any homeowners or condo association fees, as a percentage of the monthly gross income.

Which of the following tells the lender how much entitlement the veteran has available under the VA loan program?

Certificate of eligibility

What type of loan is neither guarantee nor insured by the government agencies?

Conventional

Which of the following items directly increases the supply of real estate properties on the market?

Conversion of properties

Payment history, age of accounts, inquiries, and types of accounts are factors considered in calculating a credit score. What's another item that's considered?

Credit usage

What acronym can be used to remember factors that influence real property value?

DUST DUST is an acronym used to remember the four significant factors influencing real property value: demand, utility, scarcity, and transferability.

Which of the following describes Amortized debt?

Debt that's paid off by making periodic payments

The secondary mortgage market buys loans from the primary market. How does this aid the lending market?

Ensure funds are available to borrowers

Before you can create a budget for your personal finances, you should ____________.

Estimate annual and monthly income.

In which phase of the real estate market would you expect to see an increase in hiring an employment, increased public confidence, and an increase and buyers in the market?

Expansion

Licensees who stay current with_____can better serve low to moderate income clients looking to purchase.

FHA financing requirements

Carmen purchased a single-family residence in Monterey county for $480,000 using an FHA loan and FHA minimum down payment. At the same time, Yancey made an offer on a single-family residence not far away in Fresno County for $300,000 with FHA minimum down payment and was told he could not use FHA loan for the purchase why?

FHA loan limits in Fresno County are lower than they are in Monterey County.

Which of the following resources will give you reports and statistics including house price index, foreclosures, and refinancing?

Federal Housing Finance Agency

Fannie Mae, Freddie Mac, and the federal home loan bank are regulated by the __________.

Federal housing finance agency

Which of these agencies is a government sponsored enterprise?

Freddie Mac

And investor is analyzing at three unit property by looking at its ability to produce future income. Which of the following would most likely be used to determine the value?

Gross rent multiplier

Appraiser Jamie is looking past how a property is being used to determine a higher value. What is Jamie determining?

Highest and best use

Which of the following programs broke the normal 80/20 ratio rule usually required as a loan to value an offer favorable interest rates?

Home affordable refinance program HARP

What type of value make consumers be interested in if they are looking for the potential rate of return?

Investment value

Which of the following characteristics applies to a partnership between mortgagors?

It Involves more than one mortgagor as owner, sharing responsibility for payment of a single mortgage.

What does the right of redemption allow?

It allows a property owner to pay back any debts or liens against their property until a foreclosure sale is held.

What's the advantage of using separate savings accounts for each financial goal?

It helps you see progress toward saving goals.

Which term describes a lender Temperly agreeing to suspend payments to help the borrower get caught up?

Moratorium or forbearance

Horace recently purchased 1,000 shares of a security that's made up of hundreds of mortgages. The principal and interest that borrowers of these underlying mortgages pay are eventually passed through to Horace and the other investors. What did Horace purchase?

Mortgage Backed Security

Which type of real estate investment trust involves both residential and commercial properties?

Mortgage REIT

Bo's real estate ad States : custom homes for sale with scenic mountain views. Easy financing and low down payments. What else must be included in the ad in order for it to comply with TILA?

Nothing

Recording of this item officially begins the nonjudicial foreclosure process.

Notice of default

When does PMI end?

Once the loan-to-value ratio reaches 78% of the original value.

What does PITI stand for?

Principal, Interest, Taxes, Insurance

Jackson holds a real estate broker license with an MLO endorsement. When he Renews his MLO endorsement, what does he need to submit to the NMLS?

Renewal fee

When interest rates increase, what is the impact on mortgage-backed security investors?

Returns on investments increase.

A loan that's offered Based on the homeowners equity in which funds are drawn overtime and the bank gains corresponding property ownership is called a_______.

Reverse annuity mortgage (RAM)

When using a financial system, which activity should you complete on a daily basis?

Save all receipts from spending.

A lender wants to ensure that the legal description of a property is accurate, and determine whether any improvements, encroachments, or lot size changes have been made. What made a lender request to determine this?

Survey

What does the T in PITA stand for?

Taxes

Which of the following is a potential disadvantage for a buyer who enters into a lease with an option to buy contract?

The buyer/lessee could lose any funds credited to the purchase price if he breaches the lease's terms.

In a 1031 exchange, there are rules govern by section 1031 of the internal revenue code. The rules include_________.

The property in an exchange must be like kind.

Sophia and Antonio are expecting twins. They want to sell their old house and buy a larger home using a conventional loan. In order to be sure they'll get the PMI waived, what will they need to have?

They should have a loan-to-value ratio of 80% or less.

What's One reason a homeowner would want to refinance the mortgage?

To get a lower interest rate.

What is the purpose behind appraiser independence requirements?

To protect appraisers' ability to assess an accurate value for a property by avoiding outside pressure or influence

What does TILA stand for?

Truth-In-Lending Act

What is one disadvantage of a whale over a trust?

Wills are made public and trust or not.

A veteran who has received a certificate of eligibility will qualify for a VA loan_________.

With proof of sufficient credit and income

The American recovery and reinvestment act provided mortgage assistance to __________.

Wounded servicement and servicewomen

Which parties must be identified on the promissory note?

borrower, lender

In a deed of trust, who is the beneficiary?

lender

The acronym PITI is a reference to what real estate-related concept?

mortgage payment

A goal written according to the SMART criteria is ______.

realistic

In which phase of the real estate market would you expect to see unemployment increasing, prices falling, and foreclosures on the rise?

recession

________ Is the term that the VA uses to describe the amount of net income remaining after deduction of debts, obligations, such as utility and phone bills, and monthly shelter expenses

residual income

Which of the following best describes a buyers market?

supply is greater than demand

Which appraisal approach is likely the best choice for appraising a movie theater?

to cost

Store of value, medium of exchange, and what other factor define money?

unit of value

A seller wants to break even after the broker's commission of 5% and loan balance of $300,000 are paid. At what price must the house sell?

$315,789

What is the formula for calculating the total housing ratio?

(Monthly housing expenses ÷ gross monthly income) × 100

Which of the following individuals would qualify to purchase a home under the good neighbor program?

An emergency medical technician.

Which of the following is an event that has a direct impact on property?

Builders required by the state to recycle aluminum during demolition

Who is responsible for paying the loan ordination fee in a financial real estate transaction?

Buyer

When Fannie Mae purchase a loan, they pay the loan originator a _________ fee.

Collection

What's another name for California's foreclosure reduction act?

Homeowner bill of rights

In which type of partnership do participants have shared responsibility for a single mortgage?

Partnership between mortgagors

John is looking for a home to purchase. If he represents demand, which of the following represents to supply the best fits his needs?

Single-family house for sale

What type of loan can be obtained with no down payment?

VA loan

A lapse in property insurance coverage can result in a borrower default because it leaves the lender_______should something happen to damage the property.

Vulnerable

Jeffry has excepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyers appraisal came in at $300,000. On what number with the buyers lender based a loan to value ratio?

$300,000

A buyer is purchasing a home appraised at $480,000. The buyers obtaining a 90% loan, and the lender will charge an ordination fee of 1% at closing. How much would a loan ordination fee be?

$4320

John wants to do a 1031 exchange. He just sold his property Siri how many days does he have to close on a new property?

180 days

When is purchasing a home and reviewing a loan amortization chart. If the home price is $330,000 and he's financing $300,000, once he finds the factor number that intersects with his interest rate and term of the amortization chart, what number does he multiply by that factor?

300

Borrowers should be wary of lenders who offer mortgages at more than____over current market interest rates.

5%

You do a listing presentation to a potential client over lunch at a nice restaurant. How much of your meal cost is considered tax-deductible?

50%

To which of the following borrowers might a lender be most likely recommended on a FHA long?

A young couple with only a few thousand dollars safer a down payment and relatively low credit scores.

The lender, the depository institution, and the ____________ All complete parts of the request for verification of deposit form.

Loan applicant

Marty is an independent contractor. Who or what entity contributes the employer portion of his Medicare and Social Security payments?

Marty

What does it mean if the Fed increases reserve requirements?

Member banks must keep more assets on deposit at the reserve bank.

In the secondary market, how are mortgages group together and sold?

Mortgage back securities

Special mortgage loan programs for_____include the FHA 248 and HUD 184 programs.

Native Americans living on Tribal land.

Victor is selling his property to Sheila. He's acting as a lender, and the property is unencumbered. Which of the following options describe the type or types of financial instruments Victor may use for the loan agreement?

Note With a contract for deed, mortgage, or a note with a deed of trust.

With this common loan type, the home is used as collateral and the loan creates a second mortgage if the first mortgage hasn't been paid off.

Home equity

What's the name of the calculation that looks at a borrowers monthly housing obligation including principal, interest, taxes, and insurance, as well as any homeowners or condo association fees as a percentage of their monthly gross income?

Housing ratio

Before you can create a budget for your personal finances, you should_______.

Identify and analyze your current expenses

Which of these is true about the assessed value of real estate?

It's the value used to calculate the property taxes, and it's based on a percentage of the market value.

Farewell lending must seek the courts permission to foreclose on a property used as collateral for a loan that is in default. What type of foreclosure process is likely being used?

Judicial foreclosure

The loan applicant, the depository institution, and the ___________ All complete parts of the request for verification of deposit form.

Lender

Which is the most important factor Used to determine a credit score?

Payment history

Which of the following taxes apply while an investor holds an investment property?

Rental income

The real estate settlement procedures act protects consumers by__________.

Eliminating illegal kickbacks and referral fees among settlement service providers and requiring lender disclosures as part of a residential real estate transaction involving credit.

Albert wants to sell his house to his cousin, who's willing to assume his FHA loan hairy white clause in Albert mortgage requires him to obtain the lenders permission to do this?

Alienation clause

A ___________ Is a mortgage back security issued by Freddie Mack.

Participation certificate

Which of the following types of loans issued in California may be protected from a deficiency judgment?

Second mortgage issued in August 2013 to purchase a single-family home.

Dana and Phil have evaluated their situation, and have decided to purchase a unit in a cooperative housing project. Which FHA loan program might work for them?

Title II, Section 203(n)

The____can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation.

USDA farm service agency