NM Real Estate Practice Exam Questions with Verified Solutions

NM Real Estate Practice Exam Questions with Verified Solutions Feet in an acre 43,560 ft Feet in a Mile 5,280 ft A Plat An unofficial map or plan of a parcel of land that's been or will be subdivided to show the boundaries of each created lot Metes and Bounds Description using compass headings and directions Lot and Block Land description which provides plat reference Oversees Fannie Mae and Freddie Mac and regulates the Federal Home Loan Bank Federal Housing Finance Agency Market Players purchase loans from primary lenders and package and sell them to investors Secondary Mortgage Market Mortgage A legally binding document that creates a lien on a price of property A document wherein the borrower promises to repay funds borrowed Promissory note Are paid as an interest-only or partially amortized loan with a lump-sum payment that's usually due at the end of the term Balloon loans Amortized Loans Regular installments of principal and interest Adjustable Rate Mortgage Loans in which the interest rate fluctuates based in the economic index Fixed Rate Loan A loan with a rate that does not change over the life of the loan. PITI Principal, Interest, Taxes, Insurance Deed of Trust A deed to real property, which serves the same purpose as a mortgage, involving three parties instead of two. The third party holds naked title for the benefit of the lender. Beneficiary (Lender), Trustor (Borrower), Trustee (Third Party) holds the deed Defeasance Clause Discharges the Leon when the mortgage is paid in full Acceleration Clause Makes the entire debt due immediately if the borrower defaults Title Theory Lender holds the title to the property and owns the house until the borrower pays off the loan. Easier method for foreclosing Lender holds a lien on the property but the borrower holds the title and owns the house Lien Theory Conventional Loans a. Not backed by a government agency in any way b. No limits on loan amounts unless the loan is conforming c. Conforming loans meet Fannie Mae and Freddie Mac guidelines Private Mortgage Insurance (PMI) Required for conventional mortgages where the borrower does not have 20 percent to put down Mortgage Insurance Premium (MIP) The amount paid by a mortgagor for mortgage insurance, to a government agency such as the Federal Housing Administration (FHA) Total Debt Ratio Total Monthly debt / monthly gross income x 100 Housing ratio ( Front end ratio ) Principal + interest + Taxes + Insurance + association fees x 100 Loan-to-Value Ratio (LTV) Loan Amount ÷ Sales Price or Appraised Value x 100 Insures lenders against borrower default. Down payment as low as 3.5 percent. (MIP) required. FHA Insured Loan Origination Fee A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually 1 - 3 percent of the loan Discount Points some lenders offer interest rate discounts