TEXAS REAL ESTATE PRACTICE EXAM 2025/2026
QUESTIONS AND SOLUTIONS GRADED A+
✔✔APR; total payment ; late payment charges - ✔✔To comply with Regulation Z, the
lender is required to disclose all of the following to the borrower:
✔✔the deferred payment price or total payments - ✔✔The Truth-in-Lending Act requires
that five disclosures are required if certain "Trigger Terms" are used in advertising: the
cash price or the amount of the loan; the amount of the down payment or a statement
that none is required; the number, amount and frequency of repayments; the APR; and
____ __ ___ ___ __ ___ _ _
✔✔Annual Percentage Rate (APR) - ✔✔____ ___ ___ (___) is the actual interest rate
the borrower pays when all the costs of obtaining credit are included
✔✔Amortization - ✔✔_____: the total payment is the same each month but the
allocation of interest is different each month.
✔✔Subordination clause - ✔✔___ ____: The clause that allows the lender to alternate a
second mortgage to the first position and a first mortgage to a second position
✔✔Assumption clause: - ✔✔_______ ______: The clause in the mortgage allowing the
purchase to take over the owner's existing loan. the new owner does not necessarily
take personal responsibility.
✔✔alienation clause - ✔✔The opposite of an assumption clause would be an _____
___. The _____ _____, also known as the "Due on Sale" clause, states that if the
property is sold, the entire balance of the loan must be paid off not allowing the loan to
be assumed.
✔✔HUD-1 - ✔✔______: a settlement statement form required by HUD.
✔✔Blanket mortgage - ✔✔____ _____: is normally used to finance the purchase of raw
land. This mortgage allows the developer to include more than one property
✔✔budget mortgage - ✔✔The ______ _____ requires equal payments to be made by
the borrower to cover principle and interest for the life of the loan.
✔✔Construction mortgage - ✔✔___ _____ sometimes called an 'interim loan' or interim
financing'
✔✔Reverse annuity mortgage - ✔✔___ ____ ____:a loan that allows a homeowner
over the age of 62 to borrow against the equity in his home and not repay the loan until
he no longer occupies the property
, ✔✔Term or straight loan - ✔✔____ ___ ____ ____: a loan where the borrower pays
interest only for a limited amount of time and at the end of the term, the principle is due.
✔✔Package mortgage - ✔✔____ ____: permits a home buyer to borrow money from a
single lender, not only on the value of the land and improvements, but also on the value
of equipment, such as appliances
✔✔purchase money mortgage - ✔✔______ ______ ______ can be structured many
ways. :fixed rate; adjustable rate; balloon
✔✔Balloon mortgage - ✔✔with a ______ __, the amortized payment of a mortgage
remains constant over the period of the loan but leaves an outstanding balance to be
paid at the end of the term.
✔✔Wraparound mortgage - ✔✔______ ____ new financing is wrapped around the
existing mortgage. It is illegal for real estate agents to write contracts with this financing.
✔✔lien theory - ✔✔Texas is a ____ _____ state.
✔✔mortgager(borrower), mortgagee(lender) and Trustee - ✔✔In a Deed of trust there
are 3 parties involved: ________ _____ _____
✔✔to release the lien when the debt is paid, and foreclose in the event of default -
✔✔Duties of the trustee are __ ____ ___ __ __ __ _ __ _ _ _ _and ___ __ __ _ _ _ _ _
✔✔Deed of Trust - ✔✔The _____ ___ ___ allows for non-judicial foreclosure in Texas,
that is, the lender does not have to go to court to foreclose on the property.
✔✔note - ✔✔The ____ is the contractual agreement to repay the debt. In other words, it
is the promise to repay the loan. The debt is evidenced by the promissory note. The
mortgager(borrower) must sign the note.
✔✔default, security - ✔✔the note must include: borrower, lender, promise to pay,
original principal balance, interest, term, periodic payment (including late charge),
______, _____
✔✔acceleration clause - ✔✔_______ _______: is the common provision of a mortgage
providing the holder with the right to demand that the entire outstanding balance is
immediately due and payable in the event of a default.
✔✔Amortization - ✔✔_______: the systematic and continuous repayment of an
obligation through periodic installments until the debt has been repaid in full.
QUESTIONS AND SOLUTIONS GRADED A+
✔✔APR; total payment ; late payment charges - ✔✔To comply with Regulation Z, the
lender is required to disclose all of the following to the borrower:
✔✔the deferred payment price or total payments - ✔✔The Truth-in-Lending Act requires
that five disclosures are required if certain "Trigger Terms" are used in advertising: the
cash price or the amount of the loan; the amount of the down payment or a statement
that none is required; the number, amount and frequency of repayments; the APR; and
____ __ ___ ___ __ ___ _ _
✔✔Annual Percentage Rate (APR) - ✔✔____ ___ ___ (___) is the actual interest rate
the borrower pays when all the costs of obtaining credit are included
✔✔Amortization - ✔✔_____: the total payment is the same each month but the
allocation of interest is different each month.
✔✔Subordination clause - ✔✔___ ____: The clause that allows the lender to alternate a
second mortgage to the first position and a first mortgage to a second position
✔✔Assumption clause: - ✔✔_______ ______: The clause in the mortgage allowing the
purchase to take over the owner's existing loan. the new owner does not necessarily
take personal responsibility.
✔✔alienation clause - ✔✔The opposite of an assumption clause would be an _____
___. The _____ _____, also known as the "Due on Sale" clause, states that if the
property is sold, the entire balance of the loan must be paid off not allowing the loan to
be assumed.
✔✔HUD-1 - ✔✔______: a settlement statement form required by HUD.
✔✔Blanket mortgage - ✔✔____ _____: is normally used to finance the purchase of raw
land. This mortgage allows the developer to include more than one property
✔✔budget mortgage - ✔✔The ______ _____ requires equal payments to be made by
the borrower to cover principle and interest for the life of the loan.
✔✔Construction mortgage - ✔✔___ _____ sometimes called an 'interim loan' or interim
financing'
✔✔Reverse annuity mortgage - ✔✔___ ____ ____:a loan that allows a homeowner
over the age of 62 to borrow against the equity in his home and not repay the loan until
he no longer occupies the property
, ✔✔Term or straight loan - ✔✔____ ___ ____ ____: a loan where the borrower pays
interest only for a limited amount of time and at the end of the term, the principle is due.
✔✔Package mortgage - ✔✔____ ____: permits a home buyer to borrow money from a
single lender, not only on the value of the land and improvements, but also on the value
of equipment, such as appliances
✔✔purchase money mortgage - ✔✔______ ______ ______ can be structured many
ways. :fixed rate; adjustable rate; balloon
✔✔Balloon mortgage - ✔✔with a ______ __, the amortized payment of a mortgage
remains constant over the period of the loan but leaves an outstanding balance to be
paid at the end of the term.
✔✔Wraparound mortgage - ✔✔______ ____ new financing is wrapped around the
existing mortgage. It is illegal for real estate agents to write contracts with this financing.
✔✔lien theory - ✔✔Texas is a ____ _____ state.
✔✔mortgager(borrower), mortgagee(lender) and Trustee - ✔✔In a Deed of trust there
are 3 parties involved: ________ _____ _____
✔✔to release the lien when the debt is paid, and foreclose in the event of default -
✔✔Duties of the trustee are __ ____ ___ __ __ __ _ __ _ _ _ _and ___ __ __ _ _ _ _ _
✔✔Deed of Trust - ✔✔The _____ ___ ___ allows for non-judicial foreclosure in Texas,
that is, the lender does not have to go to court to foreclose on the property.
✔✔note - ✔✔The ____ is the contractual agreement to repay the debt. In other words, it
is the promise to repay the loan. The debt is evidenced by the promissory note. The
mortgager(borrower) must sign the note.
✔✔default, security - ✔✔the note must include: borrower, lender, promise to pay,
original principal balance, interest, term, periodic payment (including late charge),
______, _____
✔✔acceleration clause - ✔✔_______ _______: is the common provision of a mortgage
providing the holder with the right to demand that the entire outstanding balance is
immediately due and payable in the event of a default.
✔✔Amortization - ✔✔_______: the systematic and continuous repayment of an
obligation through periodic installments until the debt has been repaid in full.
