Real Estate Finance Exam Review with Answers, Exams of Finance

Download Real Estate Finance Exam Review with Answers and more Exams Finance in PDF only on Docsity! Finance - Review Exam test for the end year candidates.all questions with answers below  Discount Points are figured on the: o Selling Price o Loan Balance o Salary of buyer o None of the above. - Correct answer b. Loan Balance  Which of the following is shown on an estoppel certificate? o Unpaid balance and interest rate on mortgage. o Time of foreclosure o Novation of the seller. o Any defects in the title. - Correct answer a. Unpaid balance and interest rate on mortgage.  Insurance on an FHA loan is designed to protect the: o Government o Lender o Borrower o Seller - Correct answer b. Lender  If given the choice, it's best if the Buyer assumes an existing loan: o Assumption of o Subject to o Buy Down o None of the above. - Correct answer b. Subject to  Two discount points charged on an FHA loan of $50,000 would amount to: o $500 o $700 o $1,000 o $2,000 - Correct answer c. $1,000  To compute the dollar value of a loan discount, each point is equal to: o 1% of the amount to be loaned. o 1% of the down payment. o 1% of the appraised value. o 1% of the sales price. - Correct answer a. 1% of the amount to be loaned.  The document from a lender that gives the status of the loan such as loan balance, interest, time remaining and note is the: o Loan certificate o Estoppel certificate o Equity certificate o Mortgage certificate - Correct answer b. Estoppel certificate  PMI is required when a Buyer pays less then _____ % Down. o 5% o 10% o 20% o 25% - Correct answer c. 20%  A buyer could have a deficiency judgment entered against him when he: o Purchases with an "assumption of" the mortgage o Buys "subject to" a mortgage o Pays off the loan. o All of the above. - Correct answer a. Purchases with an "assumption of" the mortgage  The Smiths own their house free and clear of all liens and offer it for sale at $110,000. The buyers, the Byrds, give a deposit of $3,000 and agree to make a down payment of $37,000. The Smiths agree to loan the Byrds $70,000, which will be amortized for 30 years at 12% interest. This type of mortgage would be: o Purchase money mortgage o Second mortgage. o Term loan. o Straight loan. - Correct answer a. Purchase money mortgage  Conventional loans must be insured by PMI insurance if the down payment is less than: o 5% o 10% o 15% o 20% - Correct answer d. 20%  A term or straight loan provides for: o Provide mortgage insurance for primary lenders. - Correct answer c. Provide a place for primary lenders to sell loans.  The Federal National Mortgage Association can do ALL but which one of the following: o Purchase conventional loans o Sell mortgages to institutions. o Buy FHA-VA loans o Originate federal loans. - Correct answer d. Originate federal loans.  The primary function of Fannie Mae is to: o Provide a source of financial backing for FHA and VA loans. o Facilitate the origination of construction loans. o Insure that savings and loan associations retain a certain percentage of their demand deposits as financial reserves. o Facilitate the flow of money and credit to primary lenders. - Correct answer d. Facilitate the flow of money and credit to primary lenders.  The clause in a mortgage which benefits the lender if the buyer defaults is the: o Redemption o Acceleration o Escalation o Arbitration - Correct answer b. Acceleration  Usury does NOT apply to: o FHA, VA and conventional loans. o FHA and VA loans o Equity loans. o Term loans. - Correct answer b. FHA and VA loans  Which is (are) TRUE concerning mortgages: o Creates a lien but does not convey title to lender. o Security for mortgage is promissory note. o Mortgages must be recorded to be legal. o All of the above are true. - Correct answer a. Creates a lien but does not convey title to lender.  A bank demands full payment on the loan because the house was sold. This was because of the: o Prepayment clause o Escalation clause o Right to sell o Alienation clause - Correct answer d. Alienation clause