REAL ESTATE 101 - FINANCE FINAL QUESTIONS
UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
Question:
1. What is one of the primary purposes of the secondary mortgage market?
a) Issue second mortgages.
b) Lend money to banks.
c) Pay off defaulted loans.
d) Cycle back money to primary lenders.
Answer:
Cycle back money to primary lenders.
Question:
2. Sam Frank is a retired Army officer who wants to purchase a new home using a VA loan. In 2000, Sam
used his VA guarantee of $36,000 when he purchased his current home. Based on the VA's maximum
guarantee of $104,250 and his partial eligibility, how much of a loan can Sam get with no money down?
a) $68,250
b) $155,000
c) $208,500
d) $273,000
Answer:
$273,000
Question:
3. What is the term used for an agreement between the borrower and a permanent lender relative to future
delivery of a takeout loan upon completion of construction?
a) Construction contract
b) Building loan agreement
c) Take-out commitment
d) Tri-party agreement
Answer:
Take-out commitment
Question:
4. Which statement about syndication is FALSE?
a) Most investors belonging to syndicates invest a lot of their own money.
b) Syndication offers small investors the opportunity to invest in real estate ventures that would otherwise
be outside their financial means.
c) A typical real estate syndicate combines the money of individual investors with the management of a
sponsor.
d) A syndicate is able to acquire real estate that could not be purchased by an individual alone.
Answer:
Most investors belonging to syndicates invest a lot of their own money.
, Question:
5. What is a leasehold mortgage called that is based mostly upon a well-known tenant's financial strength?
a) Purchase money loan
b) Credit loan
c) Term loan
d) Secondary loan
Answer:
Credit loan
Question:
6. Which of the following would probably not be a use of a junior loan?
a) Purchase of property through the VA
b) Home improvement
c) Down payment on conventional loan
d) Land improvement
Answer:
Purchase of property through the VA
Question:
7. Which of the following lease options would be the least favorable to the tenant?
a) Right of first refusal
b) Equity participation
c) Lease renewal
d) Tenant relocation
Answer:
Tenant relocation
Question:
8. Al purchases a factory as an investment. He installs sprinklers in the building. What risk control
technique is he practicing?
a) Avoiding
b) Limiting
c) Reducing
d) Accepting
Answer:
Reducing
Question:
9. Commercial banks participate in real estate finance though all but which of the following methods?
a) Trust department operations
b) Secondary mortgage market
c) Mortgage banker activities
d) Ownership of other lending enterprises
Answer:
Secondary mortgage market
UPDATED ACTUAL QUESTIONS AND CORRECT
ANSWERS
Question:
1. What is one of the primary purposes of the secondary mortgage market?
a) Issue second mortgages.
b) Lend money to banks.
c) Pay off defaulted loans.
d) Cycle back money to primary lenders.
Answer:
Cycle back money to primary lenders.
Question:
2. Sam Frank is a retired Army officer who wants to purchase a new home using a VA loan. In 2000, Sam
used his VA guarantee of $36,000 when he purchased his current home. Based on the VA's maximum
guarantee of $104,250 and his partial eligibility, how much of a loan can Sam get with no money down?
a) $68,250
b) $155,000
c) $208,500
d) $273,000
Answer:
$273,000
Question:
3. What is the term used for an agreement between the borrower and a permanent lender relative to future
delivery of a takeout loan upon completion of construction?
a) Construction contract
b) Building loan agreement
c) Take-out commitment
d) Tri-party agreement
Answer:
Take-out commitment
Question:
4. Which statement about syndication is FALSE?
a) Most investors belonging to syndicates invest a lot of their own money.
b) Syndication offers small investors the opportunity to invest in real estate ventures that would otherwise
be outside their financial means.
c) A typical real estate syndicate combines the money of individual investors with the management of a
sponsor.
d) A syndicate is able to acquire real estate that could not be purchased by an individual alone.
Answer:
Most investors belonging to syndicates invest a lot of their own money.
, Question:
5. What is a leasehold mortgage called that is based mostly upon a well-known tenant's financial strength?
a) Purchase money loan
b) Credit loan
c) Term loan
d) Secondary loan
Answer:
Credit loan
Question:
6. Which of the following would probably not be a use of a junior loan?
a) Purchase of property through the VA
b) Home improvement
c) Down payment on conventional loan
d) Land improvement
Answer:
Purchase of property through the VA
Question:
7. Which of the following lease options would be the least favorable to the tenant?
a) Right of first refusal
b) Equity participation
c) Lease renewal
d) Tenant relocation
Answer:
Tenant relocation
Question:
8. Al purchases a factory as an investment. He installs sprinklers in the building. What risk control
technique is he practicing?
a) Avoiding
b) Limiting
c) Reducing
d) Accepting
Answer:
Reducing
Question:
9. Commercial banks participate in real estate finance though all but which of the following methods?
a) Trust department operations
b) Secondary mortgage market
c) Mortgage banker activities
d) Ownership of other lending enterprises
Answer:
Secondary mortgage market
