NATIONAL PSI EXAM PREP QUESTIONS & ANSWERS
2024 ( A+ GRADED 100% VERIFIED)
1. A broker is completing a CMA to determine the potential listing price of a
seller's home. Which of the following is NOT part of the final CMA given to the
seller?: Highest and best use evaluation. / An appraiser does a highest and best use
evaluation, which does not appear in a CMA.
2. Houses in the local area have had an increase in sales price and a decrease in
days on the market. A broker who is attempting to determine the current market
value for a residential listing would get the BEST estimate of value by using:
comparables that are no more than six months old. / In a changing market, the more
recent the comparables, the more likely they are to reflect upward or downward price
changes.
3. Rental rates have increased by 2% in the last six months. Which appraisal
principle BEST explains this rate increase?: Principle of supply and demand. / The
principle of supply and demand states that as fewer properties become available for rent
or sale, the price owners can charge will increase.
4. The current monthly GRM in a neighborhood is 200, and the annual income
is $24,000. What is the estimated value of a property in this neighborhood?:
$400,000 Monthly GRM × monthly income = value. 200 × 2,000 ($24,000 ÷ 12) =
$400,000.
5. The subject property has two baths and one fireplace. The property across
the street sold for $181,000 and has two baths and two fireplaces. The property
behind the subject sold for $175,000 and has two baths and no fireplace. In the area,
baths are worth $5,000 and fireplaces are worth $3,000. What is the subject
property worth?: $178,000. / Subject PropertyComp 1$181,000Comp 2$175,0002
baths2 bathsno adjustment2 bathsno adjustment1 fireplace2 fireplaces- $3,000No
fireplace+ $3,000Adjusted price$178,000Adjusted price$178,000
6. 6. According to federal government lending regulations, a buyer purchasing a
home must have an appraisal for all the following types of financing EXCEPT:
Seller carry. / All government loans and any sold on the secondary market require an
appraisal. A seller-carry loan, or seller financing, may or may not require an appraisal.
7. A buyer chooses a loan with an LTV ratio of 90%, which requires the
purchase of PMI, instead of a loan with an 80% LTV, which would not require the
insurance. The buyer MOST likely made this choice because: the buyer wants a
smaller down payment, even though the buyer will have to pay PMI. / (private mortgage
insurance) in order to bring a smaller down payment to closing, which will mean a higher
monthly payment. PMI protects lenders in case of default.
8. A buyer is getting a new mortgage with a 95% loan-to-value ratio. The final
loan amount the lender will lend the buyer is determined by the: lower of the sales
, price or appraised value. / The loan-to-value (LTV) ratio is determined by the lower of
the sales price or appraised value.
9. The difference between using a partially amortized loan or an interest-only
term loan is that the partially amortized loan would result in: larger payments and a
smaller balloon payment. / In a partially amortized loan, the loan payments include a
partial payment toward principal. While the payments will be larger, the balloon payment
will be smaller, due to some principal payoff. With an interest-only loan, the original
principal and the final balloon payment are the same because there was no payment made
toward the principal.
10. A borrower is using leverage on a new home loan at 90% loan to value. The
disadvantage of this type of leveraging is that?: the borrower is at higher risk of
defaulting on the loan. / Leverage is using someone else's money; the higher the
leverage, the higher the risk of default. Because leveraging implies a high LTV, equity
does not build faster, and the loan may require private mortgage insurance (PMI) if there
is a small down payment.
11. A property owner has a large amount of equity in his home but does not want
to sell it to gain access to his money. What type of loan could the owner use to access
the equity in his home without having to make monthly loan payments?: Reverse
mortgage. / In a reverse mortgage, the lender makes payments to the borrower each
month. There are requirements such as age and equity in the property for this type of
loan.
12. A lender in first position filed documents to initiate foreclosure on a property.
The borrower offered to give the lender a deed in lieu of foreclosure. If the lender
accepts the deed in lieu, which of the following is TRUE?: The lender will take title
subject to any junior liens. / The foreclosure process removes all liens, but if a lender
takes a deed in lieu of foreclosure, any junior liens are still attached and would become
the obligation of the lender. There is no reason to continue the foreclosure process
because the lender will become the owner and title policies find encumbrances but do not
release them.
13. A seller has agreed to act as the buyer's bank. The seller and the buyer signed
a contract for deed to help the buyer purchase the seller's home. When will the
buyer receive possession and title?: Possession is received as agreed to in the contract,
and title is received upon making the final loan payment. / A contract for deed is a type
of seller financing in which the seller holds the deed/title until the buyer has made the
final payment. The buyer takes possession as defined in the contract, typically upon
payment of the down payment, and will receive title when final payment to the seller is
made.
14. A contract for the purchase of real property might be terminated by all of the
following EXCEPT?: the buyer, while under contract, has found a different property he
prefers and has asked the seller to terminate so he can purchase the other property. /
Contingencies allow a buyer time to determine items such as zoning and ability to qualify
2024 ( A+ GRADED 100% VERIFIED)
1. A broker is completing a CMA to determine the potential listing price of a
seller's home. Which of the following is NOT part of the final CMA given to the
seller?: Highest and best use evaluation. / An appraiser does a highest and best use
evaluation, which does not appear in a CMA.
2. Houses in the local area have had an increase in sales price and a decrease in
days on the market. A broker who is attempting to determine the current market
value for a residential listing would get the BEST estimate of value by using:
comparables that are no more than six months old. / In a changing market, the more
recent the comparables, the more likely they are to reflect upward or downward price
changes.
3. Rental rates have increased by 2% in the last six months. Which appraisal
principle BEST explains this rate increase?: Principle of supply and demand. / The
principle of supply and demand states that as fewer properties become available for rent
or sale, the price owners can charge will increase.
4. The current monthly GRM in a neighborhood is 200, and the annual income
is $24,000. What is the estimated value of a property in this neighborhood?:
$400,000 Monthly GRM × monthly income = value. 200 × 2,000 ($24,000 ÷ 12) =
$400,000.
5. The subject property has two baths and one fireplace. The property across
the street sold for $181,000 and has two baths and two fireplaces. The property
behind the subject sold for $175,000 and has two baths and no fireplace. In the area,
baths are worth $5,000 and fireplaces are worth $3,000. What is the subject
property worth?: $178,000. / Subject PropertyComp 1$181,000Comp 2$175,0002
baths2 bathsno adjustment2 bathsno adjustment1 fireplace2 fireplaces- $3,000No
fireplace+ $3,000Adjusted price$178,000Adjusted price$178,000
6. 6. According to federal government lending regulations, a buyer purchasing a
home must have an appraisal for all the following types of financing EXCEPT:
Seller carry. / All government loans and any sold on the secondary market require an
appraisal. A seller-carry loan, or seller financing, may or may not require an appraisal.
7. A buyer chooses a loan with an LTV ratio of 90%, which requires the
purchase of PMI, instead of a loan with an 80% LTV, which would not require the
insurance. The buyer MOST likely made this choice because: the buyer wants a
smaller down payment, even though the buyer will have to pay PMI. / (private mortgage
insurance) in order to bring a smaller down payment to closing, which will mean a higher
monthly payment. PMI protects lenders in case of default.
8. A buyer is getting a new mortgage with a 95% loan-to-value ratio. The final
loan amount the lender will lend the buyer is determined by the: lower of the sales
, price or appraised value. / The loan-to-value (LTV) ratio is determined by the lower of
the sales price or appraised value.
9. The difference between using a partially amortized loan or an interest-only
term loan is that the partially amortized loan would result in: larger payments and a
smaller balloon payment. / In a partially amortized loan, the loan payments include a
partial payment toward principal. While the payments will be larger, the balloon payment
will be smaller, due to some principal payoff. With an interest-only loan, the original
principal and the final balloon payment are the same because there was no payment made
toward the principal.
10. A borrower is using leverage on a new home loan at 90% loan to value. The
disadvantage of this type of leveraging is that?: the borrower is at higher risk of
defaulting on the loan. / Leverage is using someone else's money; the higher the
leverage, the higher the risk of default. Because leveraging implies a high LTV, equity
does not build faster, and the loan may require private mortgage insurance (PMI) if there
is a small down payment.
11. A property owner has a large amount of equity in his home but does not want
to sell it to gain access to his money. What type of loan could the owner use to access
the equity in his home without having to make monthly loan payments?: Reverse
mortgage. / In a reverse mortgage, the lender makes payments to the borrower each
month. There are requirements such as age and equity in the property for this type of
loan.
12. A lender in first position filed documents to initiate foreclosure on a property.
The borrower offered to give the lender a deed in lieu of foreclosure. If the lender
accepts the deed in lieu, which of the following is TRUE?: The lender will take title
subject to any junior liens. / The foreclosure process removes all liens, but if a lender
takes a deed in lieu of foreclosure, any junior liens are still attached and would become
the obligation of the lender. There is no reason to continue the foreclosure process
because the lender will become the owner and title policies find encumbrances but do not
release them.
13. A seller has agreed to act as the buyer's bank. The seller and the buyer signed
a contract for deed to help the buyer purchase the seller's home. When will the
buyer receive possession and title?: Possession is received as agreed to in the contract,
and title is received upon making the final loan payment. / A contract for deed is a type
of seller financing in which the seller holds the deed/title until the buyer has made the
final payment. The buyer takes possession as defined in the contract, typically upon
payment of the down payment, and will receive title when final payment to the seller is
made.
14. A contract for the purchase of real property might be terminated by all of the
following EXCEPT?: the buyer, while under contract, has found a different property he
prefers and has asked the seller to terminate so he can purchase the other property. /
Contingencies allow a buyer time to determine items such as zoning and ability to qualify
