Real Estate - Chap. 15 Test Questions
Terms in this set (20)
Which law requires that all advertising that references mortgage financing term contain certain disclosures? a. Equal Credit Opportunity Act, b.Fair Housing Act,c. Community reinvestment Act, d. Truth in Lending Act (Regulation Z)
d. Truth in Lending Act (Regulation Z)
In an adjustable rate mortgage, the interest rate is tied to an objective economic indicator called a(n) a. mortgage factor, b. discount rate, c. index, d. reserve requirement
In which type of loan is the loan amount divided into two parts, to be paid off separately by periodic interest payments followed by payment of the principal in full at the end of the term? a. Amortized, b. Straight, c. ARM, d. Balloon
If a lender agrees to make a loan based on an 80% LTV, what is the amount of the loan if the property appraises for $114,500 and the sales price is $116,900? a. $83,200, b. $91,300, c. $91,600, d. $92,900
114,500 * 80% = 91600
Theu buyer borrowed $85,000 to be repaid in monthly installments of $530.20 at 7% annual interest. How much of the buyer's first month's payment was applied to reducing the principal amount of the loan? a. $40.00, b. $34.37, c. $530.20, $495.83
85,000 * 7% = 5949.99 / 12 = 495.83
take monthly installment 530.20 - 495.83 = 34.37 reduces principal.
A borrower obtains a $100,000 mortgage loan for 30 years at 6 percent interest. If the monthly payments of $575 are credited first to interest and then to principal, what will be the balance of the principal after the borrower make the first payment? a. $99,425, b. $99,925, c. $99,500, d. $100,000
100,000 * 6% / 12 = 500 monthly interest therefore 75 goes to principal - 100,000 - 75 = 99,925
The federal Equal Credit Opportunity Act allows lenders to discriminate against potential borrowers on the basis of a. race, b. sex, c. age, d. amount of income
d. amount of income
The primary activity of Freddie Mac is to a. guarantee mortgages with the full faith and credit of the federal government. b. buy and pool blocks of conventional mortgages, c. act in tandem with Ginnie Mae to provide special assistance in time of tight money d. buy and sell VA and FHA mortgages
b. buy and pool blocks of conventional mortgages
Which statement about interest on a fully amortized mortgage or deed of trust loan is TRUE? a. Interest may be paid in arrears, that is at the end, of each period for which it is earned, b. The interest portion of each payment increases throughout the term of the loan, c. Only interest is paid each period, d. the final interest payment will be determined after the last payment is made
a. Interest may be paid in arrears of each period for which it is earned
A home is purchased using a fixed-rate, fully amortized mortgage loan. Which statement regarding this mortgage is TRUE? a. a balloon payment will be made at the end of the loan b. Each mortgage payment amount is the same, c. Each mortgage payment reduces the principal by the same amount, d. The principal amount in each payment is greater than the interest amount.
b. Each mortgage payment amount is the same
The provisions of the Truth in Lending Act (Regulation Z) require all of the following to be disclosed to a residential buyer EXCEPT a. discount points, b. the real estate brokerage commission, c. a loan origination fee, d. the loan interest rate
b. the real state brokerage commission
Funds for Federal Housing Administration (FHA) loans are usually provided by a. FHA, B. the Federal Reserve, c. approved lenders, d. the seller
c. approved lenders
A developer received a loan that covers five parcels of real estate and provides for the release of the mortgage lien on each parcel when certain payments are made on the loan. The type of loan arrangement is called a a. purchase-money loan b. blanket loan, c. package loan, d. wraparound loan
b. blanket loan
In a loan that requires periodic payments that do not fully amortize the loan balance by the final payment, what term BEST describes the final payment? a. Adjustment, b. Acceleration, c. Balloon, d. Variable.
Which characteristic of a fixed-rate home loan that is amortized according to the original payment schedule is TRUE? a. the amount of interest to be paid is predetermined, b. the loan cannot be sold in the secondary market, c. the monthly payment amount will fluctuate each month, d. the interest rate change may be based on an index
a. the amount of the interest to be paid is predetermined
If buyers seek a mortgage on a single-family house, they would be LEAST likely to obtain the mortgage from a a. mutual savings bank, b. life insurance company, c. credit union, d. commercial bank
b. life insurance company
A buyer purchased a home for cash 30 years ago. Today the buyer receives monthly checks from a mortgage lender that supplement her retirement income. The buyer MOST likely has obtained a(n) a. purchase-money mortgage, b. adjustable-rate mortgage, c. reverse mortgage, d. overriding deed of trust
c. reverse mortgage
Which of the following is NOT a participant in the secondary market? a. Fannie Mae, b. Ginnie Mae, c. credit union, d. Freddie Mac
c. credit union
A buyer purchase a new residence for $175,000. The buyer made a down payment of $15,000 and obtained a $160,000 mortgage loan. The builder of the house paid the lender 3% of the loan balance for the first year and 2% of the loan balance for the second year. This represented a total savings for the buyer of $8000. What type of mortgage arrangement is this? a. Wraparound, b. Package, c. Blanket, d. Buydown
The buyers purchased a residence for $195,000. They made a down payment of $25,000 and agreed to assume the seller's existing mortgage, which had a current balance of $123,000. The buyers financed the remaining $47,000 of the purchase price by executing a mortgage and note to the seller. This type of loan, by which the seller become the mortgagee is called a a. wraparound mortgage, b. package mortgage, c. balloon note, d. purchase-money mortgage
d. purchase-money mortgage - this is when the seller agrees to finance all or part of the purchase price, PMM Purchase Money Mortgage is used when the buyer does not qualify for a typical lender loan. Seller has recourse to foreclose on the property.
Package loans - developers, buy the whole package furniture and all
Blanket loans - builders of subdivisions
Wraparound loans - buyer obtains additional financing from a second lender without paying off the first loan, refinancing.
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