Mortgage and Real Estate Terms: A Study Guide, Exams of Nursing

Download Mortgage and Real Estate Terms: A Study Guide and more Exams Nursing in PDF only on Docsity! GA Real Estate AMP Exam (Vocab-Part 3) Latest Questions With Complete Solutions. 200. The amount paid by a mortgagor for mortgage insurance, either government or private is called A. mortgage insurance premium B. private mortgage insurance premium C. FHA insurance premium D. VA insurance premium Answer- Answer A. The mortgage insurance premium is paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company. 201. Which of the following statements is not true of mortgage life and disability insurance? A. It begins immediately after someone becomes disabled B. It pays off the entire debt if someone dies during the life of the mortgage C. It is a type of term life insurance often bought by borrowers D. In this type insurance, the amount of coverage decreases as the principal declines Answer- Answer: A. Be careful to read the terms of coverage because often it does not start immediately upon the disability, but after a specified period, sometimes forty-five days. 202. Which is the best definition of "multi-dwelling units"? A. They are properties that provide separate housing units for more than one family with several different mortgages B. They are properties that provide separate housing units for more than one family, but with a single mortgage C. They are properties that provide separate housing units for more than one family, but are leased rather than owned D. They are properties that provide separate housing units for more than one family on a lease-option basis Answer- Answer: B. Multi-dwelling units provide separate housing units for more than one family, although they secure only a single mortgage 203. Which of the following is true of "negative amortization"? A. It is also called "deferred interest" B. Because some ARM's allow the interest rate to fluctuate, the borrower's minimum payment may not cover all the interest C. The unpaid interest is added to the balance of the loan and the loan balance grows larger instead of smaller D. All of the above Answer- Answer: D. Because some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment, if a borrower makes the minimum payment it may not cover all the interest. The borrower is deferring the interest payment, called "deferred interest." It is then added to the balance, making it grow larger, and thus the term "negative amortization. 204. For someone to be determined to be "pre-qualified" for a loan, what has taken place? A. The person has given a written statement saying he can afford the loan B. A loan officer has given a written opinion of the borrower's ability to qualify based on debt, income, or savings C. The loan officer has reviewed a credit report on the borrower D. The information given to the loan officer is in the form of written documentation Answer- Answer: B. Pre-qualification usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. This information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower. 205. The four components of a monthly mortgage payment on impounded loans are A. principal, interest, taxes, maintenance B. principal, interest, insurance, bank fees C. principal, interest, taxes, miscellaneous charge D. principal, interest, taxes, insurance Answer- Answer: D. The four components of a monthly mortgage payment on impounded loans are principal, interest, taxes and insurance (PITI). While taxes and insurance are usually paid into an escrow account until they're due, principal refers to the part of the monthly payment that reduces the remaining balance and interest is the fee charged for borrowing money. 206. The term "periodic rate cap" refers to A. an adjustable rate mortgage B. a limit on the amount the interest rate can increase or decrease during any one adjustment period C. conventional fixed-rate loans D. both A and B Answer- Answer: D. For an adjustable rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be is called a periodic rate cap 207. The acquisition of property through the payment of money or its equivalent is called A. a purchase money transaction A. one of the indexes used for determining interest rate changes on some adjustable rate mortgages B. is an average of what banks are paying on certificates of deposit C. both A and B D. neither A nor B Answer- Answer: C. A certificate of deposit index is used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit. 219. Which of the following is true of "common areas"? A. They include swimming pools, tennis courts, and other recreational facilities B. They are portions of a building, land, and amenities owned or managed by a planned unit development or condominium project's homeowners' association C. They have shared expenses by the project owners for the operation and maintenance D. all of the above Answer- Answer: D. Common areas include portions of a building, land, and amenities owned by or managed by a planned unit development or condo project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. They include swimming pools,, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc. 220. In a condominium hotel you would find the following: A. Rental or registrations desks B. Daily cleaning services C. No individual ownership D. Both A and B Answer- Answer: D. Often found in resort areas, this is a condominium project with rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services. It is operated like a commercial hotel even though the units are individually owned. 221. A type of multiple ownership where the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property and gives each resident the right to occupy a specific apartment or unit is called A. an investment condominium B. an investment planned unit development C. a cooperative D. a government-run housing project Answer- Answer: C. A cooperative (co-op) is a type of multiple ownership where the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property and gives each resident the right to occupy a specific unit 222. Which is true of the cost of funds index (COFI)? A. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans in the 11th District of the Federal Home Loan Bank B. It is one of the indexes used to determine interest rate changes for certain government fixed rate mortgages C. It is an index used to determine interest rate changes for certain adjustable-rate mortgages D. Both A and C Answer- Answer: D. The cost of funds index is one of the indexes used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weight-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings and loans, in the 11th District of the Federal Home Loan Bank. 223. Once you buy a house, the amount you pay each month includes an extra amount above principal and interest. This extra money is held in a special account to pay your taxes and homeowners insurance when it comes due. This account is called A. an escrow account B. a savings account C. a regular checking account D. both B and C Answer- Answer: A. Once you close your transaction, you probably have an escrow account with your lender which is composed of extra money taken from your monthly payments to be put in escrow and pay your taxes and insurance when they come due. The lender pays them with your money instead of you paying them yourself. 224. Which of the following does the Federal Housing Administration do? A. Lends money and plans and constructs housing B. Insures residential mortgage loans made by government lenders C. Sets standards for construction and underwriting D. None of the above Answer- Answer: C. The main activity of the FHA is the insuring of residential mortgage loans made by private lenders. It sets standards for construction and underwriting but does not lend money or plan or construct housing. 225. If you purchase a type of insurance called homeowner's warranty, you would do so because A. It will cover repairs to certain items, such as heating or air conditioning if they break down within the coverage period B. The seller will sometimes pay for it C. Both A and B D. Neither A nor Answer- Answer: C. Homeowner's warranty will cover repairs to certain items like air conditioning or heating during the coverage period. The buyer often requests the seller to pay for this, but either party can pay. 226. A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court is called A. a legal foreclosure B. a court-appointed foreclosure C. a judicial foreclosure D. a civil foreclosure Answer- Answer: C. A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court is called a judicial foreclosure. 227. Which of the following is not part of loan servicing? A. Processing payments, sending statements B. Managing the escrow account C. Handling pay-offs and assumptions D. Sending a monthly statement to the owner Answer- Answer: D. The company you make your loan payments to is "servicing" your loan by processing payments, sending statements, managing the escrow account, providing collection efforts on delinquent loans, making sure insurance and property taxes are made, handling pay- offs and assumptions and other services. 228. A period payment cap applies to A. any mortgage taken out in the U.S. B. adjustable rate mortgages C. fixed-rate loans D. government loans Answer- Answer: B. The period payment cap applies to an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another. It is a limit on the amount that payments can increase or decrease during any one adjustment period. 229. The commitment issued by a lender to borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost is called A. a rate lock B. under lock and key C. a promissory note D. a deed of trust Answer- Answer: A. A rate lock is a commitment from a lender to the borrower or other mortgage originator guaranteeing a specific rate for a specific time at a specific cost 230. A fund set aside for replacement of common property in a condominium, PUD, or cooperative project, particularly that which has a short life expectancy, such as carpet or furniture is called A. a capital improvements fund B. a replacement reserve fund C. a savings fund D. a contingency fund Answer- Answer: B. The fund set aside for replacement of common property in a condominium, PUD or cooperative project is called a replacement reserve fund. 231. The term "servicing" describes A. the collection of mortgage payments from borrowers B. what the mechanic does to your car C. duties of a loan servicer D. both A and C Answer- Answer: D. Servicing is the collection of mortgage payments from borrowers and related responsibilities of a loan servicer.