ASREB (Arizona School of Real Estate and Business) and
Business Midterm Problem Solving Exam Questions and
certified for accuracy solutions; updated 2025/2026
Financing Concepts/Loans/ Documentation - correct answer Types of loans and
repayment plans
1. Level payments - payments same through life of loan (amortized)
2. Installment - non-level payments - principal goes down each month
3. Interest only (term or straight) - balloon payment at the end
4. Budget - PITI - FHA & VA loans, called housing budget
Financing Concepts/Loans/ Documentation (cont'd) - correct answer 5. Graduated
payments - "GPM" - negative amortization possible
6. Variable interest and payment - "ARM" - change rate based on market
7. Equity participation/percentage - "SAM" - Shared Appreciation, shared with someone
else
8. Reverse mortgage
Financing Concepts/Loans/ Documentation (cont'd) - correct answer 9. Construction
(Interim, Bridge, Swing or Gap) - At certification of occupancy, loan is due
a. Draws - periodic loan installments as work progresses
b. Obligatory advances
c. Take out loan - permanent loan at end to pay off bridge or swing loan
10. Open End - Loan balance can be increased periodically (equity line of credit)
Financing Concepts/Loans/ Documentation (cont'd) - correct answer 11. Conventional
- non-government insured (FMAC, FNEMA)
12. FHA insured - insurance program to protect lender
13. VA Guaranteed - lender protected
14. Chattel - personalty
, 15. Package - includes realty and personalty (e.g., restaurant)
16. Purchase Money - carrybacks only (seller becomes financer)
Financing Concepts/Loans/ Documentation (cont'd) - correct answer 17. Blanket - loan
over multiple parcels
a. Release clause - Allows selling part of parcel
b. Lot releases - e.g., subdivision financed lot-by-lot
18. Junior (Subordinate)
a. Priority - Behind someone in line
b. Subordination of prior lien
c. Subordination clause
Encumbrance Definition - correct answer Anything that affects or limits the fee simple
title to property. A right or interest in a property held by one who is not the legal owner of
the property.
Types of Encumbrances - correct answer 1. Easements
2. Deed Restrictions (private controls)
3. Encroachments
4. Liens
Easements - correct answer 1. In gross (burden to person)
2. Appurtenant (burden to land); once recorded, an easement is an easement
Deed Restrictions (Private Controls) - correct answer What people put on property -
given by grantor
1. Other names
a. Declaration of Restrictions
b. Restrictive Covenants
c. CC&Rs - covenants, conditions & restrictions
2. From the grantor - usually usually developer; passed from seller to buyer
Business Midterm Problem Solving Exam Questions and
certified for accuracy solutions; updated 2025/2026
Financing Concepts/Loans/ Documentation - correct answer Types of loans and
repayment plans
1. Level payments - payments same through life of loan (amortized)
2. Installment - non-level payments - principal goes down each month
3. Interest only (term or straight) - balloon payment at the end
4. Budget - PITI - FHA & VA loans, called housing budget
Financing Concepts/Loans/ Documentation (cont'd) - correct answer 5. Graduated
payments - "GPM" - negative amortization possible
6. Variable interest and payment - "ARM" - change rate based on market
7. Equity participation/percentage - "SAM" - Shared Appreciation, shared with someone
else
8. Reverse mortgage
Financing Concepts/Loans/ Documentation (cont'd) - correct answer 9. Construction
(Interim, Bridge, Swing or Gap) - At certification of occupancy, loan is due
a. Draws - periodic loan installments as work progresses
b. Obligatory advances
c. Take out loan - permanent loan at end to pay off bridge or swing loan
10. Open End - Loan balance can be increased periodically (equity line of credit)
Financing Concepts/Loans/ Documentation (cont'd) - correct answer 11. Conventional
- non-government insured (FMAC, FNEMA)
12. FHA insured - insurance program to protect lender
13. VA Guaranteed - lender protected
14. Chattel - personalty
, 15. Package - includes realty and personalty (e.g., restaurant)
16. Purchase Money - carrybacks only (seller becomes financer)
Financing Concepts/Loans/ Documentation (cont'd) - correct answer 17. Blanket - loan
over multiple parcels
a. Release clause - Allows selling part of parcel
b. Lot releases - e.g., subdivision financed lot-by-lot
18. Junior (Subordinate)
a. Priority - Behind someone in line
b. Subordination of prior lien
c. Subordination clause
Encumbrance Definition - correct answer Anything that affects or limits the fee simple
title to property. A right or interest in a property held by one who is not the legal owner of
the property.
Types of Encumbrances - correct answer 1. Easements
2. Deed Restrictions (private controls)
3. Encroachments
4. Liens
Easements - correct answer 1. In gross (burden to person)
2. Appurtenant (burden to land); once recorded, an easement is an easement
Deed Restrictions (Private Controls) - correct answer What people put on property -
given by grantor
1. Other names
a. Declaration of Restrictions
b. Restrictive Covenants
c. CC&Rs - covenants, conditions & restrictions
2. From the grantor - usually usually developer; passed from seller to buyer
