Texas Principles of Real Estate II (Answered)
208 Questions and Correct Answers, 100%
Correct. Latest 2024/2025.
What does the denominator show?
Tells how many total parts there are
What should you do to convert fractions to decimals?
Divide the numerator by the denominator
Landlords base rents on what criteria?
Landlords decide what their rents will be, based on the rental market, type of property and the
geographic location.
Formula: Commission
Sales price x Rate of commission =
Formula: Commission Rate
Commission ÷ Price =
Formula: Property's Price
Commission ÷ Commission rate =
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?
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?
Neither, the court does not favor any specific group or person.
Profit or Loss
Selling price - Original cost =
Percentage of Profit
Profit ÷ Original cost =
Profit Margin
,percentage of selling price that turned into profit.
Profit ÷ Selling price =
Add-on Interest
Loan amount x Interest rate x # of payments
(LA x IR x N)
Formula: APR (Annual Percentage Rate)
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?
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?
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?
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?
$1,500
$75,000 x .01 x 2
What is the purpose of Discount Points?
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?
$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?
Loan-to-value
How many square feet are in 1 acre?
, 43,560
What is a hectare?
10,000 square meters
2.471 acres
What ratio is calculated based on all of the monthly obligations the borrower has outstanding?
Debt Ratio
What are the conventional loan guidelines for income and debt ratios?
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?
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?
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?
In advance
A mixed number has both a fraction and a:
whole number
Which of the following must be prorated or divided proportionately between the buyer and the seller?
Taxes, Insurance, Utilities
Convert fractions to decimals when doing a real estate math problem by
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
A credit to the buyer & a debit to the seller
What ratio is calculated based on all of the monthly obligations the borrower has outstanding?
Debt ratio
What is the first step in the appraisal process?
Define the problem and the scope of work
What does an appraiser do after he or she decides which value approaches to use?
Determines the type of data needed & the sources to be consulted, then collects the data
208 Questions and Correct Answers, 100%
Correct. Latest 2024/2025.
What does the denominator show?
Tells how many total parts there are
What should you do to convert fractions to decimals?
Divide the numerator by the denominator
Landlords base rents on what criteria?
Landlords decide what their rents will be, based on the rental market, type of property and the
geographic location.
Formula: Commission
Sales price x Rate of commission =
Formula: Commission Rate
Commission ÷ Price =
Formula: Property's Price
Commission ÷ Commission rate =
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?
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?
Neither, the court does not favor any specific group or person.
Profit or Loss
Selling price - Original cost =
Percentage of Profit
Profit ÷ Original cost =
Profit Margin
,percentage of selling price that turned into profit.
Profit ÷ Selling price =
Add-on Interest
Loan amount x Interest rate x # of payments
(LA x IR x N)
Formula: APR (Annual Percentage Rate)
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?
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?
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?
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?
$1,500
$75,000 x .01 x 2
What is the purpose of Discount Points?
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?
$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?
Loan-to-value
How many square feet are in 1 acre?
, 43,560
What is a hectare?
10,000 square meters
2.471 acres
What ratio is calculated based on all of the monthly obligations the borrower has outstanding?
Debt Ratio
What are the conventional loan guidelines for income and debt ratios?
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?
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?
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?
In advance
A mixed number has both a fraction and a:
whole number
Which of the following must be prorated or divided proportionately between the buyer and the seller?
Taxes, Insurance, Utilities
Convert fractions to decimals when doing a real estate math problem by
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
A credit to the buyer & a debit to the seller
What ratio is calculated based on all of the monthly obligations the borrower has outstanding?
Debt ratio
What is the first step in the appraisal process?
Define the problem and the scope of work
What does an appraiser do after he or she decides which value approaches to use?
Determines the type of data needed & the sources to be consulted, then collects the data
