TEXAS PRINCIPLES OF REAL ESTATE II EXAM LATEST , PRACTICE
QUESTIONS AND CORRECT ANSWERS
What does the denominator show? - ANSWER: Tells how many total parts there are
What should you do to convert fractions to decimals? - ANSWER: Divide the
numerator by the denominator
Landlords base rents on what criteria? - ANSWER: Landlords decide what their rents
will be, based on the rental market, type of property and the geographic location.
Would it be a fair legal decision that the seller might be forced to pay a commission
to an agent who had a buyer that purchased one week after the expiration of the
listing agreement but was shown the property prior to the end of the listing
agreement if the listing agreement had a sixty-day protection (safety) period? -
ANSWER: Yes, if the broker provided the buyers' name to the seller when the
listing ended and the seller had not listed with another real estate broker.
Does a court of law favor an attorney at law or a licensed real estate broker? -
ANSWER: Neither, the court does not favor any specific group or person.
Add-on Interest - ANSWER: Loan amount x Interest rate x # of payments
(LA x IR x N)
Formula: APR (Annual Percentage Rate) - ANSWER: 2 x number of payments periods
in one-year x total financing charges ÷ (principle, or amount borrowed x (number
of scheduled payments + 1)
2 x n x IR ÷ P(N+1)
Points are paid at closing and are equal to what? - ANSWER: 1% of the loan amount
Which of the following methods do lenders use to compute the interest on the total
amount of the loan for the entire loan term? - ANSWER: The add-on rate to
compute the interest on the total amount of the loan for the entire loan term
John is getting a $95,000 loan at 7.25 percent and will pay 4 discount points. What
will the effective interest rate be? - ANSWER: 7.75%
4 points x 1/8 percent = 4/8 = .50 percent
7.25 + .50 = 7.75 percent
If a lender charges two (2) origination points on a $75,000 loan, how much would
that cost the buyer? - ANSWER: $1,500
$75,000 x .01 x 2
, What is the purpose of Discount Points? - ANSWER: Designed to offset any losses
the lender might suffer when selling the loan to the secondary mortgage market.
What is the total simple interest due on the following loan amount, $12,500 at 5.5%
for one year? - ANSWER: $687.50
$12,500 x .055 x 1 = 687.50
What is the ratio between borrowed funds and the market value of the property
being financed? - ANSWER: Loan-to-value
How many square feet are in 1 acre? - ANSWER: 43,560
What is a hectare? - ANSWER: 10,000 square meters
2.471 acres
What ratio is calculated based on all of the monthly obligations the borrower has
outstanding? - ANSWER: Debt Ratio
What are the conventional loan guidelines for income and debt ratios? - ANSWER:
Conventional loans typically require income ratio to be under 28% and debt ratio
to be 36% or lower
What are the FHA guidelines for income and debt ratios? - ANSWER: FHA guidelines
for income and debt ratios are 31% income/ 43 % debt
Which of the following procedures are used to compute the area of an irregular
parcel or room? - ANSWER: Divide the shape into regular rectangles, squares, or
triangles; compute the area for each figure; then add the areas together to get the
total area for the parcel.
When closing on rental property, to do the monthly proration, rents are always paid
when? - ANSWER: In advance
A mixed number has both a fraction and a: - ANSWER: whole number
Which of the following must be prorated or divided proportionately between the
buyer and the seller? - ANSWER: Taxes, Insurance, Utilities
Convert fractions to decimals when doing a real estate math problem by - ANSWER:
dividing the numerator by the denominator.
Utilities are paid in arrears. Therefore the buyer will end up paying a portion of the
seller's bill since the buyer will get the entire bill at month end. On the closing
statement, this will appear as a - ANSWER: A credit to the buyer & a debit to the
seller
QUESTIONS AND CORRECT ANSWERS
What does the denominator show? - ANSWER: Tells how many total parts there are
What should you do to convert fractions to decimals? - ANSWER: Divide the
numerator by the denominator
Landlords base rents on what criteria? - ANSWER: Landlords decide what their rents
will be, based on the rental market, type of property and the geographic location.
Would it be a fair legal decision that the seller might be forced to pay a commission
to an agent who had a buyer that purchased one week after the expiration of the
listing agreement but was shown the property prior to the end of the listing
agreement if the listing agreement had a sixty-day protection (safety) period? -
ANSWER: Yes, if the broker provided the buyers' name to the seller when the
listing ended and the seller had not listed with another real estate broker.
Does a court of law favor an attorney at law or a licensed real estate broker? -
ANSWER: Neither, the court does not favor any specific group or person.
Add-on Interest - ANSWER: Loan amount x Interest rate x # of payments
(LA x IR x N)
Formula: APR (Annual Percentage Rate) - ANSWER: 2 x number of payments periods
in one-year x total financing charges ÷ (principle, or amount borrowed x (number
of scheduled payments + 1)
2 x n x IR ÷ P(N+1)
Points are paid at closing and are equal to what? - ANSWER: 1% of the loan amount
Which of the following methods do lenders use to compute the interest on the total
amount of the loan for the entire loan term? - ANSWER: The add-on rate to
compute the interest on the total amount of the loan for the entire loan term
John is getting a $95,000 loan at 7.25 percent and will pay 4 discount points. What
will the effective interest rate be? - ANSWER: 7.75%
4 points x 1/8 percent = 4/8 = .50 percent
7.25 + .50 = 7.75 percent
If a lender charges two (2) origination points on a $75,000 loan, how much would
that cost the buyer? - ANSWER: $1,500
$75,000 x .01 x 2
, What is the purpose of Discount Points? - ANSWER: Designed to offset any losses
the lender might suffer when selling the loan to the secondary mortgage market.
What is the total simple interest due on the following loan amount, $12,500 at 5.5%
for one year? - ANSWER: $687.50
$12,500 x .055 x 1 = 687.50
What is the ratio between borrowed funds and the market value of the property
being financed? - ANSWER: Loan-to-value
How many square feet are in 1 acre? - ANSWER: 43,560
What is a hectare? - ANSWER: 10,000 square meters
2.471 acres
What ratio is calculated based on all of the monthly obligations the borrower has
outstanding? - ANSWER: Debt Ratio
What are the conventional loan guidelines for income and debt ratios? - ANSWER:
Conventional loans typically require income ratio to be under 28% and debt ratio
to be 36% or lower
What are the FHA guidelines for income and debt ratios? - ANSWER: FHA guidelines
for income and debt ratios are 31% income/ 43 % debt
Which of the following procedures are used to compute the area of an irregular
parcel or room? - ANSWER: Divide the shape into regular rectangles, squares, or
triangles; compute the area for each figure; then add the areas together to get the
total area for the parcel.
When closing on rental property, to do the monthly proration, rents are always paid
when? - ANSWER: In advance
A mixed number has both a fraction and a: - ANSWER: whole number
Which of the following must be prorated or divided proportionately between the
buyer and the seller? - ANSWER: Taxes, Insurance, Utilities
Convert fractions to decimals when doing a real estate math problem by - ANSWER:
dividing the numerator by the denominator.
Utilities are paid in arrears. Therefore the buyer will end up paying a portion of the
seller's bill since the buyer will get the entire bill at month end. On the closing
statement, this will appear as a - ANSWER: A credit to the buyer & a debit to the
seller
