Virginia national and state PSI real estate study flashcards Questions and Answers solved

Virginia national and state PSI real estate study flashcards Questions and Answers solved . Government rights in land 1 2 3 4 1. Police Power 2. Eminent Domain 3. Property Taxes 4. Escheat police power Enacts and Enforces laws governing land use - public control of land ( Eg. zoning, building codes, etc) eminant domain Power of a government to take private property for public use. Property Taxes Ad valorem ( at assessed value) Escheat governments reversionary right. Abandoned property of intestate owners with no heirs may revert to the state. special assessments A special assessment tax is a local tax in addition to property taxes that is levied on homeowners to fund a specific project. The assessment is levied for a pre-set number of years and then is discontinued. Prospective homebuyers can research special assessments on a property at the county assessor's office eminent domain the right of a government or its agent to expropriate private property for public use, with payment of compensation. condemnation is the seizure of private property by a government for a public purpose. Eminent domain gives governments the power to take private property. However, the government must compensate the owner for seizing the property Zoning refers to municipal or local laws or regulations that dictate how real property can and cannot be used in certain geographic areas. Zoning laws can limit commercial or industrial use of land in order to prevent oil, manufacturing or other types of businesses from building in residential neighborhoods master plans is a set of laws enacted by state, county and city governments to determine the required design and construction standards for home construction. For example, building codes determine how electrical, plumbing and framing must be built. ... Building codes are enforced by the building permit process. flood zones Zones B, X, and C are at the lowest risk, while high-risk zones start with either an A or a V (V zones are coastal areas) on the map. Zone AE, for example, has a 1% probability of flooding every year, also known as a 100-year floodplain—a low flood hazard. Wetland. an area that is inundated or saturated by surface water or groundwater at a frequency and duration sufficient to support a prevalence of vegetation typically adapted to saturated soil conditions. Types of hazards lead, asbestos (which causes mesothelioma), carbon monoxide, formaldehyde (which causes SBS), radon (second leading cause of lung cancer), and underground storage tanks. Abatemen refers to a tax break offered by a state or municipality offered on certain types of real estate or business opportunities. A real estate tax abatement may reduce a home's property taxes for a period of time, or may grant tax breaks to businesses. mitigation Loss mitigation is the process of modifying or refinancing the cost of a loan in order to avoid foreclosure. Borrowers who can't afford their monthly payments and are in danger of defaulting on a loan often work with their lenders to attempt loss mitigation Superfund A fund created by Congress in 1980 to clean up hazardous waste sites. Money for the fund comes from taxing chemical products. Emergency Planning and Community Right-To-Know Act Requires reporting of toxic releases: the Toxic Release Inventory (TRI); Encourages response for chemical releases Superfund Amendments and Reauthorization Act (SARA) amended CERCLA once again in 1986. This amendment added many important changes to the program. It stressed more permanent remedies for environmental hazards and encouraged states to more strongly consider requirements and standards of other states to increase protection. Enforcement First enacted in 1989 to prioritize the identification of responsible parties for contaminated properties. Asbestos is a mineral that has natural insulating and fireproofing capabilities. Until the 1980s, construction and manufacturing industries valued the mineral for these capabilities, and used it as an additive in building products and insulation. Private Controls deed restrictions Powers of Attorney a document that grants someone the authority to act for another person and grants an agent powers to perform acts in the absence of the grantor types of delegation of authority (a) Delegation of Leasing Authority; (b) Delegation of Real Property Management and Operation Authority; (c) Delegation of Individual Repair and Alteration Project Authority; (d) Delegation of Lease Management Authority (Contracting Office Representative Authority); (e) Delegation of Administrative Contracting Officer (ACO) Authority; (f) Delegation of Real Property Disposal Authority; (g) Security Delegation of Authority; and (h) Utility Services Delegation of Authority. Deed conditions or restrictions owner may restrict use of land so that it creates a defeasible fee (special limitation) Covenants, conditions, and restrictions (CC&Rs) legal document that is filed with the county recorder's office and made a part of the official real estate records that run with the land that is part of the community Homeowners association regulations e governing body that makes and enforces many of the rules that pertain to "common interest developments" such as tract housing and condominiums Purpose and use of appraisals for valuation The purpose of an appraisal is established by the client. It points to the information that the client needs to answer specific questions pertaining to real property. When an estimate of value is required in an appraisal, the type of value sought must be defined at the outset. General steps in appraisal process 1. State the purpose .2. List the data needed and its sources . 3. Gather, record and verify the data. 4. Gather, record and verify the specific data, such as site development. 5. Gather, and record and verify the data for each approach .6. Analyze and interpret the data. 7. Reconcile data for the final estimate.8. Prepare an appraisal report. Situations requiring appraisal by certified appraiser all transactions of $1,000,000 or more. Economic Principles of Value 1. Principle of Anticipation 2..Principle Of Demand, Supply, and Desire 3. Principle Of Substitution 4. Principle Of Balance 5.Principle Of Progression 6.Principle Of Regression` 6-Principle of Anticipation-Buyers buy properties for future benefits. 2.Principle Of Demand, Supply, and Desire-The scarcity of a commodity influences its value by creating a greater demand for the item 3.Principle Of Substitution-The value of a property tends to be set at the cost of an equally desirable substitute property 4.Principle Of Balance-This principle refers to the relationship between cost, added cost and the value it returns 5.Principle Of Progression-The idea behind this principle is, the price of a property escalates with an increased perceived value of a location. 6.Principle Of Regression-The price of a property decreases with a reduced perceived value of a site. Property Characteristics the physical and locational nature of a property, as contrasted with transactional characteristics, which reflect the nature and condition of sale-purchase Sales or market comparison approach compares recently-sold local similar properties to the subject property. Cost approach The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building, less depreciation. Income Analysis Approach uses the income the property generates to estimate fair value Selecting comparables The more similar the comparable is, the more recently sold, and the fewer adjustments that are required, the more reliable the estimate of value will be. REMEMBER - all adjustments are made to comparables and NOT subject property Adjusting Comparables deduct from comp if better than subject; add to comp if worse than subject Points extra charges that must be paid by the buyer to the lender in order to get a lower interest rate. One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000) LTV Loan to value ratio - the percent of the price that the buyer is borrowing - high LTV means low down payment PMI Private mortgage insurance is what borrowers have to pay when they take out a mortgage from a commercial lender and pay a down payment of 20 percent or less. interest A sum paid or charged for the use of money or for borrowing money PITI Principal, Interest, Taxes, Insurance Financing instruments he deed of trust, note and mortgage, and real property sales contract—share the require- ments listed above, but each has its own unique form and content. 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) note and mortgage promissory note secured by a specified mortgage loan. Real Property Sales Contract An agreement to convey title to real property upon satisfaction of specified conditions which does not require conveyance within one year of formation of the contract. Conventional loans a home buyer's loan that is not offered or secured by a government entity. It is available through or guaranteed by a private lender or the two government-sponsored enterprises—Fannie Mae and Freddie Mac *FHA insured loans (Federal Housing Administration) a mortgage that is insured by the Federal Housing Administration (FHA) and issued by an FHA-approved lender. *VA guaranteed loans (Veterans Affairs) does not make loans guarantees them. only available to veterans, can be 100% loan no down payment but must live in property USDA/rural loan programs provides homeownership opportunities to rural Americans, and home renovation and repair programs. USDA also provides financing to elderly, disabled, or low-income rural residents in multi-unit housing complexes to ensure that they are able to make rent payments. Amortized loans a loan paid off in equal installments Adjustable-rate mortgage loans the interest rate changes according to economic conditions Bridge loans These are short-term financing agreements that fund a company's operation until it can arrange a more comprehensive longer-term financing. The need for these arises when a company runs out of cash before it can obtain more capital investment though long-term debt or equity. Land Contract The seller accepts a down payment on a parcel of land but title to the property does not pass until the last principal payment has been received. This is referred to as an installment sales contract or a contract for a deed. installment contract A contract that requires or authorizes delivery in two or more separate lots to be accepted and paid for separately. Contract for Deed A means by which the seller passes possession but retains title to the property until the total or a substantial portion of the purchase price is paid. Installment contract. The two parties here are the vendor (owner) and the vendee (buyer). Lending process application through closing 1. 2. 3. 4. 5. 6. 1.Mortgage Pre-Approval 2, house shopping age loan application processing writting 6. close truth in lending disclousure A Truth-in-Lending Disclosure Statement provides information about the costs of your credit. Your Truth-in-Lending form includes information about the cost of your mortgage loan, including your annual percentage rate (APR) RESPA Real Estate Settlement Procedures Act - requires special information booklet, requires good faith estimate, requires uniform settlement statement Equal Credit Opportunity Act Gives all applicants the same rights. Credit providers may not discriminate based on: Age, Social Security, Housing loans. CFPB/TRID rules on financing and risky loan features mplemented the Dodd-Frank Act's directive to combine certain mortgage disclosures that consumers receive under TILA and RESPA and requires that all creditors use standardized forms for most transactions Debt ratios look at how much borrowing a company has done in order to finance the operations of the business credit scoring a method of evaluating an applicant's creditworthiness by assigning values to such factors as income, existing debts, and credit references Credit History A summary of a person's borrowing and repayment history agent, a person who acts or does business for another