practice real estate test pt. 2

Per Regulation Z, advertisement requires full disclosure of credit terms by a mortgage lender? "Affordable rates available" "Assume loan at 6% interest" "Low down payment" "Stop paying rent"

"Assume loan at 6% interest"

Which house will likely hold its value best? "best" house in the "worst" neighborhood "worst" house in the "best" neighborhood $50,000 house that overlooks a huge landfill $500,000 house in an area of apartment complexes

"worst" house in the "best" neighborhood

The sale of a property closes on August 25. The unpaid property tax bill is $5,238. Buyer and seller will pay their share of the taxes at closing. How will the taxes be paid at closing using a statutory year, assuming the seller owns the closing day? $1,818.75 Credit Buyer / $1,818.75 Debit Seller $1,818.75 Debit Buyer / $3,419.25 Credit Seller $1,818.75 Debit Buyer / $3,419.25 Debit Seller $3,419.25 Debit Seller / $3,419.25 Credit Buyer

$1,818.75 Debit Buyer / $3,419.25 Debit Seller

Donna sells her property to Amy, with settlement taking place on July 31. Donna has NOT yet paid the taxes, which are $4,384. Since they are due on September 1, Donna will pay her share and Amy will pay her share at settlement. How will the taxes be paid at closing using a statutory year, assuming the seller owns the closing day? $1,826.67 Credit Buyer / $1,826.67 Debit Seller $1,826.67 Debit Buyer / $2,557.34 Debit Seller $2,557.34 Debit Seller / $2,557.34 Debit Buyer $2,557.34 Credit Seller / $1,826.67 Debit Buyer

$1,826.67 Debit Buyer / $2,557.34 Debit Seller

The sale of a property closes on May 24. Taxes are estimated to be $4,654 per year and have NOT been paid. How will the taxes appear on the Closing Disclosure based on a 360-day year, assuming the seller owns the closing day? $1,281.80 Credit Buyer / $2,318.20 Debit Seller $1,861.60 Credit Seller / $1,861.60 Debit Buyer $2,318.20 Credit Seller / $1,281.80 Debit Buyer $1,861.60 Debit Seller / $1,861.60 Credit Buyer

$1,861.60 Debit Seller / $1,861.60 Credit Buyer

Appraiser Marla analyzes several rental properties in her town, determining their respective GRMs using gross annual rent. She determines that the annual gross rent multiplier for her subject property should be around 9.5. The property currently rents for $1,225 per month. What would be Marla's approximate estimate of value? $116,375 $128,950 $139,650 $154,750

$139,650

Comp #3 has three bathrooms; the subject property has four bathrooms. A bathroom in that neighborhood is valued at $4,000. Comp #3 does not have a fireplace; the subject does. A fireplace is valued at $6,000. Comp #3 has a pool; the subject does not. A pool is valued at $12,000. Comp #3 sold for $200,000. What is the comp's adjusted value? $198,000 $200,000 $202,000 $210,000

$198,000

An applicant for a mortgage loan is a salaried employee who is paid $1,350 every two weeks. In addition, she receives $500 a month in alimony. What gross monthly income can be used to qualify her? $2,700 $2,925 $3,200 $3,425

$3,425

A borrower owes $3,600 this year for property tax. What is the maximum amount the lender can collect every month for the impound/escrow account? $300 $360 $600 There is no limit.

$300

The replacement cost of a dwelling has been estimated at $193,500. The dwelling, determined to have an economic life of 75 years, is estimated to have an effective age of 15 years. What is the amount of depreciation? $37,900 $38,500 $38,700 $39,200

$38,700

Buyer Hannah is purchasing a property for $212,000, with settlement on July 31. She has been approved for an 80% loan-to-value conventional loan. Her lender is charging a total of three points for all mortgage-related fees. She purchases an annual homeowner's insurance policy for $678, and the lender requires her to deposit two months of the insurance premiums into an escrow account for reserve. Annual property taxes for the property are $3,364, and they have not been paid. Hannah and the seller will each pay their portion of the tax bill at closing. Hannah also needs to deposit three months of property taxes into the escrow account for reserve. She paid the following outside of closing: $300 appraisal, $80 pest inspection report; $400 home inspection. Other closing costs total $820. Hannah paid a $3,000 earnest money deposit and a $2,000 due diligence fee. For the prorations, use a 360-day statutory year and assume that the seller owns the day of closing. What is Hannah's needed cash to close, rounded to the nearest dollar? $45,562 $46,342 $47,614 $48,342

$46,342

Wade is purchasing Amy's property in Bluebird Estates. Settlement is scheduled for September 12. The annual homeowner's association fee in Bluebird Estates is $1,020. Amy paid the quarterly amount when it was due on July 1. How will the HOA fee appear on the settlement statement? Assume that the seller owns the day of closing for proration purposes and use a statutory year. $50.94 Credit Seller / $50.94 Debit Buyer $50.94 Credit Seller / $204.06 Debit Buyer $204.06 Debit Seller / $204.06 Credit Buyer $204.06 Credit Seller / $50.94 Debit Buyer

$50.94 Credit Seller / $50.94 Debit Buyer

Mike sells his property to Denise. The settlement takes place on November 7. Mike paid the annual property taxes of $4,389 on August 25. How will the taxes appear on the Closing Disclosure based on a statutory year, assuming seller Mike owns the closing day? $646.15 Credit Seller / $646.15 Debit Buyer $646.15 Debit Seller / $646.15 Credit Buyer $877.79 Credit Seller / $877.79 Debit Buyer $877.79 Debit Seller / $877.79 Credit Buyer

$646.15 Credit Seller / $646.15 Debit Buyer

Wilmington Manor has a reproduction cost of $850,000. The building depreciation is 20% and the site value is $150,000. What is the value of the property? $810,000 $820,000 $830,000 $840,000

$830,000

Charlene's gross stable monthly income is $3,500. What is the maximum monthly mortgage payment (PITI) she would qualify for using the housing expense ratio of 28% for a conventional loan? $875 $980 $1,020 $1,750

$980

The closing costs shown in the Loan Estimate must be available for at least 3 business days. 7 business days. 10 business days. 14 business days

10 business days.

The Regal apartment building recently sold for $920,000. The four units generate a total of $8,000 each month in rent; the landlord pays utilities, maintenance, and property taxes that average $2,500 each month. What is the gross monthly rent multiplier? 28.75 41.82 87.62 115

115

A lender must provide a Loan Estimate to the borrower within _________ of completing a loan application. 2 business days 3 business days 5 business days 7 business days

3 business days

How many days are there in a statutory year? 300 days 360 days 365 days 366 days

360 days

A week after closing, a borrower discovers that she overpaid a settlement charge that was on the Closing Disclosure. The lender must reimburse her and send her a corrected Closing Disclosure within 15 days. 30 days. 45 days. 60 days.

60 days.

The Loan Estimate must be given to a borrower at least ______ before loan consummation. 1 business day 3 business days 5 business days 7 business days

7 business days

Six-unit buildings in a particular neighborhood have been selling for about $480,000. A survey of several owners indicates that a typical NOI is $36,000. What is an appropriate cap rate for six-unit buildings in this area? 7.5% 9% 13.3% 17.3%

7.5%

Which statement about a comparative market analysis is FALSE? A CMA assists the buyer in determining a fair price to offer for a home. A CMA helps the seller decide on an appropriate list price for the home. A CMA may be given to a client, prospective client, or customer. A CMA should evaluate only currently listed competing properties.

A CMA should evaluate only currently listed competing properties.

In an explanation of mortgages and lien position, which statement is FALSE? Construction lenders frequently refuse to lend money unless assured of first lien position. A HELOC is an example of a mortgage that is typically in the highest senior position. A junior mortgage is any mortgage with a lower lien position than another. Any mortgage in a higher lien position is said to be a senior mortgage

A HELOC is an example of a mortgage that is typically in the highest senior position.

With regard to property insurance coverage included with a mortgage loan, which statement is FALSE? A lender should provide a new homeowner with the lender requirements for property insurance at the loan closing. Homeowner's insurance will most likely have a deductible amount that the borrower must first pay in the event of any loss. The borrower is free to choose a home insurance company of his choice, but the company must meet the lender requirements. New homeowners may receive a discount for insuring their automobile and other articles with the hazard insurance provider.

A lender should provide a new homeowner with the lender requirements for property insurance at the loan closing.

According to North Carolina law, which of the following statements about a CMA/BPO is FALSE? Any CMA/BPO must specifically state that it is NOT an appraisal. Any estimate of a property's value or worth is considered to be an appraisal. An appraisal must only be performed by a licensed or certified real estate appraiser. An actively licensed non-provisional broker may NOT perform a CMA/BPO outside of a transaction for a fee.

An actively licensed non-provisional broker may NOT perform a CMA/BPO outside of a transaction for a fee.

Which federal entity is responsible for enforcing RESPA? CFPB FMNA FTC HUD

CFPB

Under TILA, the creditor is responsible for providing a copy of the _____________ to the borrower. Closing Disclosure Loan Estimate Federal Finance Agreement Sales Contract

Closing Disclosure

Which statement is FALSE with regard to recording the deed? Deeds must be recorded to be valid. Deeds must show evidence of a real estate transfer tax. Loan funds are dispersed after the deed is recorded. Recording a deed makes it part of the public record.

Deeds must be recorded to be valid.

Paul wants to find out if a property he's interested in buying might be located in a flood zone. What is a good source that can provide Paul with that information? Federal Flood Hazard Services FEMA Flood Map Service Center National Flood Insurance Program Special Flood Hazard Area Database

FEMA Flood Map Service Center

Which entity is a participant in the secondary mortgage market?Federal Home Loan Mortgage Corporation Federal Housing Administration U.S. Department of Housing and Urban Development USDA Rural Development Agency

Federal Home Loan Mortgage Corporation

Which of the following are the most popular coverages form and is the minimum coverage required by mortgage lenders? HO-1 HO-2 HO-3 HO-4

HO-3

Insurance policies are usually assignable only with the written consent of the insured Insurer lender mortgage company

Insurer

Who is the covered insured for an HO-4 Renters policy? Jake, the property manager Jeanne, the tenant Jeff, the lender Jill, the condo owner

Jeanne, the tenant

Larry applied for a loan with XYZ Bank on June 1. XYZ Bank must send Larry a written explanation of their decision by June 10. June 15. June 30. July 4.

June 30.

Which document must be provided to a borrower within three business days of completing a loan application? Closing Disclosure Initial Escrow Statement Loan Estimate Servicing Transfer Statement

Loan Estimate

__________ are debt obligations that represent claims to the cash flows from pools of mortgage loans. Discount points Escrow funds Liability funds Mortgage-backed securities

Mortgage-backed securities

When explaining to a buyer the difference between the pre-qualification and pre-approval stages of the mortgage loan application process, which statement is TRUE? Pre-qualification of a borrower is binding on the lender. Pre-qualification of a borrower is not binding on the lender. A real estate licensee or mortgage broker can give a borrower a pre-approval. With a pre-approval, a lender is not rendering a credit decision.

Pre-qualification of a borrower is not binding on the lender.

The Loan Estimate and Closing Disclosure were created under the provisions of which federal rule? HUD REPSA TRID TILA

TRID

Which of the following is NOT an element of a valid lease? The parties must be legally competent. The property must be dearly identified (legal description or address). The terms of the tenancy must be contained in the agreement. The lease must be in writing.

The lease must be in writing.

Borrower Joe applies for a loan on Monday, March 1, and the lender hands him the Loan Estimate before he leaves. On Thursday, March 4, the lender mails Joe the Closing Disclosure. What is the earliest this loan may close? Monday, March 8 Tuesday, March 9 Wednesday, March 10 Thursday, March 11

Thursday, March 11

The TRID rule implements provisions of the Real Estate Settlement Procedures Act and the Equal Credit Opportunity Act. Fair Credit Act. Home Loan Disclosure Act. Truth in Lending Act.

Truth in Lending Act.

A borrower applies for a loan on Monday, August 1 and receives a Loan Estimate that day. The lender delivers a Closing Disclosure to the borrower via courier on Tuesday, August 2. What is the soonest that closing could take place? Friday, August 5 Monday, August 8 Tuesday, August 9 Wednesday, August 10

Tuesday, August 9

Stella is purchasing Clark's house. She will assume his outstanding mortgage of $80,000. On the Closing Disclosure, the $80,000 assumption shows up as a credit to Clark only. a credit to Stella only. a credit to Stella and a debit to Clark. a debit to Stella and a credit to Clark.

a credit to Stella and a debit to Clark.

For which property would the gross rent multiplier method be most appropriate? an apartment building with five units a duplex a retail complex with three units a single-family home that is owner-occupied

a duplex

The provisions of RESPA apply to which type of loan transaction? a loan assumption that does not require lender approval a loan insured by the Federal Housing Administration a loan for the purpose of purchasing a commercial warehouse the transfer of a residential loan to the secondary market

a loan insured by the Federal Housing Administration

A(n) ____ shows every title-related event in the public record for a particular piece of property. abstract of title deed survey title report

abstract of title

The purpose of the Closing Disclosure is to provide an accounting of actual settlement costs. an appraisal of the property value. a good faith estimate of all settlement costs. options for choosing settlement services.

an accounting of actual settlement costs.

A buyer is MOST LIKELY to pay which financing cost outside of closing? appraisal fee discount points underwriting fee yield spread premium

appraisal fee

A lease can be terminated by any of the following methods EXCEPT: agreement of the parties. assignment. constructive eviction. condemnation.

assignment.

An attorney typically attends which method of closing? escrow closing only settlement meeting only both closing methods neither closing method

both closing methods

In most residential real estate transactions, who typically chooses the closing attorney? broker seller lender buyer

buyer

Which of these settlement costs is MOST LIKELY to be paid by the seller? commission pest inspection survey title insurance

commission

Harvey owns a large home in a nice neighborhood. His house, impeccably maintained, is at the upper limit of its value. After he retired, Harvey spent $28,000 building a new deck and greenhouse on the back of his property. Although he enjoyed the new features, they did not add anything to the value of his home. This is an example of the principle of conformity. contribution. regression. substitution.

contribution.

An earnest money deposit held in escrow is reflected at settlement as a debit to the buyer. credit to the buyer. credit to both the buyer and seller. credit to the seller.

credit to the buyer.

A due diligence fee is considered to be a ______ to a seller and a ______ to a buyer. credit / credit credit / debit debit / credit debit / debit

debit / credit

The sales price of the property being sold is a ______ to the buyer and a ______ to the seller. credit / credit credit / debit debit / credit debit / debit

debit / credit

Lenny would have received $120,000 from the sale of his house, however, he agreed to pay the buyer an allowance of $700 to have the house painted. How will that $700 show up on a settlement statement? credit to the buyer only credit to Lenny and debit to the buyer debit to Lenny only debit to Lenny and credit to the buyer

debit to Lenny and credit to the buyer

If the landlord fails to perform her duty, the tenant can NOT abandon the premises. decide by himself to stop paying rent. sue for damages. terminate the lease.

decide by himself to stop paying rent

Of these settlement costs, which would MOST LIKELY be paid by the buyer? commission deed preparation fee deed recording fee transfer tax

deed recording fee

The right to use another person's real property for a particular purpose describes a(n) easement. lien. recert. title.

easement.

A period of time during which a structure may reasonably be expected to perform the function for which it was designed is known as its chronological age. depreciated life. economic life. effective age.

economic life.

Which best describes the due diligence period in a purchase contract? date the contract is signed through midnight on the date indicated in the contract date the contract is signed through the date of closing effective date through 5:00 p.m. on the date indicated in the contract effective date to the date of occupation of the property by the buyer

effective date through 5:00 p.m. on the date indicated in the contract

Which is NOT an example of governmental influences on market value include? zoning building codes employment rates fire regulations

employment rates

In an escrow closing, which party is usually present? buyer escrow agent lender seller

escrow agent

During a conflict between the rights and duties of parties to a lease contract, which of these governs and determines the residential tenant's rights and protections? common law federal and state law privity of contract privity of estate

federal and state law

When creating an operating budget, a property manager will include property taxes and insurance in what category? capital expenses fixed expenses net expenses variable expenses

fixed expenses

Lucy leases a storefront for her candy business. The rent for the first six months was $500 and is set to increase 10% every month for the next 18 months as the business takes off. Lucy has what kind of lease? graduated lease ground lease index lease percentage lease

graduated lease

When finding comps when performing the sales comparison approach, an appraiser will disregard each of these EXCEPT homes currently listed for sale in the market. homes for which the listing agreements have expired. homes that have sold recently in the subject's area. homes that were taken off the market.

homes that have sold recently in the subject's area

Which of the following appraisal approach should be used for single-family rental home appraisals? cost highest and best use income sales comparison

income

To see if there are any outstanding mortgages, liens, or judgments associated with the property, title company representative Gabe completes a chain of title search. lien search. property survey. tax search.

lien search.

Which of the following are examples of social forces that may affect land value and may be used in an overall appraisal? Select all the correct answers. birth/death rates fire regulations income levels marriage/divorce rates

marriage/divorce rates. birth/death rates

According to RESPA, which of the following would LEAST LIKELY be considered a settlement service provider? mortgage loan originator moving company real estate appraiser real estate broker

moving company

David is a paralegal who often prepares documents and coordinates closings. In this role, David may execute documents on the buyer's behalf. may serve in the same capacity as an attorney. must be a neutral third party. must be under the direct supervision of the closing attorney.

must be under the direct supervision of the closing attorney.

As long as an escrow/impound account is required for property taxes, the lender must provide the borrower with an Escrow Statement once a month. once a quarter. once a year. whenever the property tax rate changes.

once a year.

A typical management proposal should include a six-month expense projection. one-year operating budget and a five-year plan. one-year stabilized budget and a six-year plan. five-year employment contract and a one-year plan.

one-year operating budget and a five-year plan.

A residential appraisal is a(n) opinion of value of a subject property. guaranteed value a listed property will bring. probable asking price for a property for sale. CMA/BPO.

opinion of value of a subject property.

On a Standard Form HO-3 policy, where would you look to determine if a loss is covered? conditions declarations policy provisions insuring agreement

policy provisions

Lenders that keep and service loans in-house as part of their investment portfolios instead of selling them in the secondary market are portfolio lenders. repository lenders. service lenders. warehouse lenders.

portfolio lenders.

The simple process of asking prospective clients general questions about income, expenses, and debts is known as credit reporting. pre-approval. pre-qualification. underwriting

pre-qualification.

At what point should the buyer consult with his lender with regard to the buyer's loan? after signing the purchase contract once the due diligence period expires during the due diligence period prior to signing the purchase contract

prior to signing the purchase contract

After receiving the inspection report, buyer Allison wants the seller to make certain repairs. When should Allison's agent provide the repair list to the seller? after signing the purchase contract prior to the expiration of the due diligence period prior to signing the purchase contract once the closing has been scheduled

prior to the expiration of the due diligence period

A person hired by a real property owner to administer, market, merchandise, and maintain property, especially rental property is a(n) broker investor. lessee. property manager.

property manager.

In North Carolina, the lien on real estate that takes priority over all other liens is a construction lien. first mortgage lien. growth equity mortgage. real property tax lien.

real property tax lien.

To protect the lessee's (tenant's) interest against third parties, North Carolina law requires that any lease that is required to be in writing and signed due to the statute of frauds must also be notarized. recorded. transferrable. assignable.

recorded.

On the seller's settlement statement, a debit ______ the amount received. On the buyer's settlement statement, a debit ______ the amount owed. increases / increases increases / reduces reduces / increases reduces / reduces

reduces / increases

Patti has had enough with her tenant Dan. His rent check has bounced twice in the past six months. His neighbors have complained that he parks in their designated spots, and he leaves trash in the common hallway. Patti shuts off his electricity and water and posts an eviction notice on his door. This is an example of actual eviction. constructive eviction. retaliatory eviction. self-help eviction.

self-help eviction.

In the absence of any agreement, the day of closing belongs to the buyer. closing attorney. mortgagee. seller.

seller.

Under the Fair Credit Reporting Act, consumer reporting agencies generally may not report negative credit information that is more than how many years old? five seven ten twelve

seven

A partial transfer of lease rights and obligations is called a(n) assignment. novation. sublease. surrender.

sublease.

Tom and Margo find their dream house, which includes the stainless-steel appliances they wanted, but it's priced high. They decide to buy a house two blocks away with nearly identical features, minus the appliances, for $20,000 less. They figure they can replace the appliances later if they choose and still come out ahead financially. What theory is at work? conformity contribution regression substitution

substitution

To find the buyer's cash to close, subtract credits from the loan amount and add debits. subtract debits from the loan amount and add credits. subtract credits from the sales price and add debits. subtract debits from the sales price and add credits.

subtract credits from the sales price and add debits.

The purpose of the settlement statement is to determine the purchase price of the property. determine which party pays the brokerage commission. report income to the Internal Revenue Service. summarize the financial aspects of a real estate transaction.

summarize the financial aspects of a real estate transaction.

A binder is a(n) endorsement. Illegal contract. temporary contract. co-insurance clause.

temporary contract.

After the termination of Steve's lease, he continued to remain in his apartment without the permission of his landlord. Steve's tenant status is tenancy at sufferance. tenancy at will. tenancy for years. tenancy from period-to-period.

tenancy at sufferance.

Pedro has a six-month lease. This is a(n) ________ leasehold and Pedro ________ terminate the lease early. tenancy at will / can tenancy at will / cannot tenancy for years / can tenancy for years / cannot

tenancy for years / cannot

Which estate automatically renews for consecutive periods? tenancy at sufferance tenancy at will tenancy for years tenancy from period-to-period

tenancy from period-to-period

In North Carolina, comparative market analysis and a broker price opinion are illegal. the same. also appraisals. guarantees of property value.

the same.

Market value is basically the same as value-in-demand. value-in-exchange. value-in-price. value-in-use.

value-in-exchange.

When is borrower Drew more likely to consider an adjustable-rate mortgage (ARM)? when interest rates are high when interest rates are low when they have a large down payment when they have no down payment

when interest rates are high