2025 Real Estate Finance Elaborations
For all practical purposes, an "Alienation Clause" is basically the same as a:
Ans: Due on Sale Clause
When the lender determines the amount of money to loan to a borrower by using a percentage
of the property's appraisal or sales price, they are trying to determine the:
Ans: Loan-to-Value Ratio
An insurance policy that protects the lender when there is increased risk due to low down
payment is known as:
Ans: PMI - Private Mortgage Insurance
What are the two most common documents used in real estate financing?
Ans: Promissory Note and either a Mortgage or a Deed of Trust
In a title theory state, the mortgage or a deed of trust is still considered a:
Ans: transfer of legal title to the lender
Lenders prefer a Deed of Trust over a mortgage because:
Ans: it is easier for the Lender to foreclose if the borrower defaults
A deed of Trust contains a "Trustee", whereas a mortgage does not. What is a Trustee?
Ans: An independent third-party that represents neither borrower nor lender
When the loan is paid, the Promissory Note is marked "Paid in Full" and returned to the
borrower along with:
a
Ans: d) a recorded Reconveyance Deed
What is the purpose of an "Or More" Clause in a mortgage?
Ans: d) It allows for prepayment of the entire mortgage without penalty
Amortization is a method of repaying principle and interest of a loan through periodic
payments ---
Ans: a) over a specified length of time
A loan wherein the borrower pays the interest only on a weekly, monthly, or yearly basis is
referred to as a:
Ans: c) Straight Loan
A mortgage that covers two or more parcels of real estate as security at the same time is
known as a:
Ans: Blanket Mortgage
Which of the following is not a type of "graduated mortgage?"
Ans: Lot Release Mortgage
The loan that is available to seniors (age 62+) and is used to release the home equity in the
property as one lump sum or multiple payments is called a:
Ans: Reverse Mortgage
FHA, VA, and Conventional are the three main types of real estate loans. How is the
Conventional Loan different from the other two?
Ans: Conventional Loans are not federally insured or guaranteed
Fees that are charged by most lenders to increase their financial yield or profit on a loan are
called:
Ans: Discount Points
To be eligible for a VA loan, the veteran must have a certificate of eligibility. Eligible
veterans include:
Ans: a) Persons in active duty for a minimum of 181 days
b) Honorably discharged veterans that served in certain war times
c) The unmarried spouse of a veteran whose death was service connected
, The rule of thumb is that a lender allows 25% of the buyer's monthly income for the new loan
payment. What percentage of income does FHA allow for the new loan payment and what
percentage do they allow for the buyer's debt ratio?
Ans: 29% for the new home loan and 41% for the debt ratio
The two entities that influence and control real estate financing are:
Ans: The Federal Reserve System and the United States Treasury
The agency of the U.S. Cabinet that has all responsibilities in all areas of national housing
policies is called:
Ans: The Department of Housing and Urban Development (or HUD)
What act that Congress passed in 1989 created the Office of Thrift (OTS) Supervision and the
Savings Association Insurance Fund (SAIF)?
Ans: The Financial Institutions Reform, Recovery, and Enforcement Act
The various lending institutions where homebuyers go to borrow money to finance the
purchase of a home are referred to as:
Ans: The Primary Market
A REIT obtains money by selling shares, or certificates of ownership, in the trust to give the
individual investors the funds to purchase real estate investments. What do the letters REIT
stand for?
Ans: Real Estate Investment Trusts
The Secondary Market is made up of private investors and government agencies that buy and
sell real estate mortgage loans. Which one of the following is not one of the three major
agencies?
Ans: "Annie's Fanny"
The two primary disclosures that the Truth in Lending Act requires the lender to make to the
loan applicant are the:
Ans: The annual percentage rate and the total finance charge
There are several sources of loans in the Primary Market, but which one of these types of
lenders are considered to be major sources for these loans?
Ans: a) Savings and Loans
b) Commercial and Savings Banks
c) Mortgage Companies
Home buyers are classified into four primary groups, namely the first-time homebuyer,
buyers moving into a larger home, buyers moving into a smaller home, and:
Ans: Recreation homebuyers and retirees
Compared to buyers that are moving into larger or smaller homes, the first-time homebuyer
tends to be a challenge because:
Ans: a) They may have difficulty coming up with a down payment
b) They may not have enough of an established credit history
c) They are uninformed about important matters concerning home buying
Before the agent begins the search for a home for the prospective buyer, what are the first two
questions that need to be answered?
Ans: What does the buyer want and need, and what can they afford?
A preliminary determination that often results from the use of a Buyer's Information
Worksheet is:
Ans: The buyer's income-to-debt ratio
There may be times when the buyer's expectations exceed their ability to purchase, but this
can sometimes be overcome by the helping the buyer prioritizing and:
Ans: The agent exercising some creativity
For all practical purposes, an "Alienation Clause" is basically the same as a:
Ans: Due on Sale Clause
When the lender determines the amount of money to loan to a borrower by using a percentage
of the property's appraisal or sales price, they are trying to determine the:
Ans: Loan-to-Value Ratio
An insurance policy that protects the lender when there is increased risk due to low down
payment is known as:
Ans: PMI - Private Mortgage Insurance
What are the two most common documents used in real estate financing?
Ans: Promissory Note and either a Mortgage or a Deed of Trust
In a title theory state, the mortgage or a deed of trust is still considered a:
Ans: transfer of legal title to the lender
Lenders prefer a Deed of Trust over a mortgage because:
Ans: it is easier for the Lender to foreclose if the borrower defaults
A deed of Trust contains a "Trustee", whereas a mortgage does not. What is a Trustee?
Ans: An independent third-party that represents neither borrower nor lender
When the loan is paid, the Promissory Note is marked "Paid in Full" and returned to the
borrower along with:
a
Ans: d) a recorded Reconveyance Deed
What is the purpose of an "Or More" Clause in a mortgage?
Ans: d) It allows for prepayment of the entire mortgage without penalty
Amortization is a method of repaying principle and interest of a loan through periodic
payments ---
Ans: a) over a specified length of time
A loan wherein the borrower pays the interest only on a weekly, monthly, or yearly basis is
referred to as a:
Ans: c) Straight Loan
A mortgage that covers two or more parcels of real estate as security at the same time is
known as a:
Ans: Blanket Mortgage
Which of the following is not a type of "graduated mortgage?"
Ans: Lot Release Mortgage
The loan that is available to seniors (age 62+) and is used to release the home equity in the
property as one lump sum or multiple payments is called a:
Ans: Reverse Mortgage
FHA, VA, and Conventional are the three main types of real estate loans. How is the
Conventional Loan different from the other two?
Ans: Conventional Loans are not federally insured or guaranteed
Fees that are charged by most lenders to increase their financial yield or profit on a loan are
called:
Ans: Discount Points
To be eligible for a VA loan, the veteran must have a certificate of eligibility. Eligible
veterans include:
Ans: a) Persons in active duty for a minimum of 181 days
b) Honorably discharged veterans that served in certain war times
c) The unmarried spouse of a veteran whose death was service connected
, The rule of thumb is that a lender allows 25% of the buyer's monthly income for the new loan
payment. What percentage of income does FHA allow for the new loan payment and what
percentage do they allow for the buyer's debt ratio?
Ans: 29% for the new home loan and 41% for the debt ratio
The two entities that influence and control real estate financing are:
Ans: The Federal Reserve System and the United States Treasury
The agency of the U.S. Cabinet that has all responsibilities in all areas of national housing
policies is called:
Ans: The Department of Housing and Urban Development (or HUD)
What act that Congress passed in 1989 created the Office of Thrift (OTS) Supervision and the
Savings Association Insurance Fund (SAIF)?
Ans: The Financial Institutions Reform, Recovery, and Enforcement Act
The various lending institutions where homebuyers go to borrow money to finance the
purchase of a home are referred to as:
Ans: The Primary Market
A REIT obtains money by selling shares, or certificates of ownership, in the trust to give the
individual investors the funds to purchase real estate investments. What do the letters REIT
stand for?
Ans: Real Estate Investment Trusts
The Secondary Market is made up of private investors and government agencies that buy and
sell real estate mortgage loans. Which one of the following is not one of the three major
agencies?
Ans: "Annie's Fanny"
The two primary disclosures that the Truth in Lending Act requires the lender to make to the
loan applicant are the:
Ans: The annual percentage rate and the total finance charge
There are several sources of loans in the Primary Market, but which one of these types of
lenders are considered to be major sources for these loans?
Ans: a) Savings and Loans
b) Commercial and Savings Banks
c) Mortgage Companies
Home buyers are classified into four primary groups, namely the first-time homebuyer,
buyers moving into a larger home, buyers moving into a smaller home, and:
Ans: Recreation homebuyers and retirees
Compared to buyers that are moving into larger or smaller homes, the first-time homebuyer
tends to be a challenge because:
Ans: a) They may have difficulty coming up with a down payment
b) They may not have enough of an established credit history
c) They are uninformed about important matters concerning home buying
Before the agent begins the search for a home for the prospective buyer, what are the first two
questions that need to be answered?
Ans: What does the buyer want and need, and what can they afford?
A preliminary determination that often results from the use of a Buyer's Information
Worksheet is:
Ans: The buyer's income-to-debt ratio
There may be times when the buyer's expectations exceed their ability to purchase, but this
can sometimes be overcome by the helping the buyer prioritizing and:
Ans: The agent exercising some creativity
