Page |1
Real Estate Finance AYPO Questions and
Correct Answers/ Latest Update / Already
Graded
Real estate has been estimated to represent approximately
Ans: one-half of the world's total economic wealth.
The buyer's ability to finance the property is an important, if not the ---
----, contingency in most residential transactions, and a significant
driver in the entire real estate-based economy.
Ans: primary
Texas is a:
a. Lien Theory
b. Title Theory
Ans: a. Lien Theory
Lien Theory
Ans: In lien theory states such as Texas, the security for a
mortgage is a lien placed on the property, which is removed
All rights reserved © 2025/ 2026 |
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once the loan is fully repaid. The title (or other legal instrument
documenting the rights and privileges of the holder of the title)
is actually held by the buyer/property owner. This makes
foreclosure more challenging than when the lender (as in a title
theory state) or a third party (as in a deed of trust) hold actual
title. In all of these cases, the buyer/property owner holds
equitable title to the property.
Title Theory
Ans: In title theory states, the mortgage is secured by the
lender holding legal title to the property until the mortgage is
paid off. Again, the borrower holds "equitable" title to the
property which carries many, but not all, of the rights granted
by the actual title. The full title is given to the borrower when
the loan obligation has been fully satisfied. Because the lender
has the full title, foreclosure on the property is easier than if the
mortgage was only secured by a lien, because the title does not
need to be recovered from the defaulting buyer.
Mortgages
Ans: While the loan is the money a lender provides to buy the
home, the mortgage and deed of trust are the "instruments"
that document the lender's actual interest in the property.
All rights reserved © 2025/ 2026 |
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Amortization
Ans: paying off of debt with a fixed schedule in regular
installments over time, therefore, a fully amortized loan is one
that is paid back over the term of the loan (most frequently 15 -,
20-, and 30-year periods) through a set number of equal
payments.
promissory note
Ans: piece of the mortgage loan contract committing the
borrower to pay back the loaned money.
Second Mortgages
Ans: loan that is secured by a property that is already collateral
for another mortgage, generally a first mortgage.
Type of Second Mortgages Often Issued
Ans: -Home Equity Loans
-Home Equity Line of Credit (HELOC
Home Equity Loans
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, Page |4
Ans: Home equity loans are standard lump-sum loans that
convert the equity of a house into usable funds.
Home Equity Line of Credit (HELOC
Ans: Almost like Home Equity Loans-The difference is that
home equity lines of credit operate more like credit cards.
Instead of a lump sum disbursement, the borrower is allowed to
use the line of credit whenever they des ire.
Wraparound Mortgages
Ans: The wraparound loan, or a "wrap," is a form of creative
financing, that may or may not be allowed with a homeowner's
original loan. It is a secondary loan for real property, that
'wraps around' the first loan, without paying it off.
Chattel Mortgages
Ans: A chattel mortgage is a mortgage loan that is secured by
some form of personal property that is not tied to a piece of
land. Like a standard mortgage loan, the borrower transfers
ownership of the personal property, like a car or boat, to the
lender until the loan is paid off.
Deeds of Trust
All rights reserved © 2025/ 2026 |
Real Estate Finance AYPO Questions and
Correct Answers/ Latest Update / Already
Graded
Real estate has been estimated to represent approximately
Ans: one-half of the world's total economic wealth.
The buyer's ability to finance the property is an important, if not the ---
----, contingency in most residential transactions, and a significant
driver in the entire real estate-based economy.
Ans: primary
Texas is a:
a. Lien Theory
b. Title Theory
Ans: a. Lien Theory
Lien Theory
Ans: In lien theory states such as Texas, the security for a
mortgage is a lien placed on the property, which is removed
All rights reserved © 2025/ 2026 |
, Page |2
once the loan is fully repaid. The title (or other legal instrument
documenting the rights and privileges of the holder of the title)
is actually held by the buyer/property owner. This makes
foreclosure more challenging than when the lender (as in a title
theory state) or a third party (as in a deed of trust) hold actual
title. In all of these cases, the buyer/property owner holds
equitable title to the property.
Title Theory
Ans: In title theory states, the mortgage is secured by the
lender holding legal title to the property until the mortgage is
paid off. Again, the borrower holds "equitable" title to the
property which carries many, but not all, of the rights granted
by the actual title. The full title is given to the borrower when
the loan obligation has been fully satisfied. Because the lender
has the full title, foreclosure on the property is easier than if the
mortgage was only secured by a lien, because the title does not
need to be recovered from the defaulting buyer.
Mortgages
Ans: While the loan is the money a lender provides to buy the
home, the mortgage and deed of trust are the "instruments"
that document the lender's actual interest in the property.
All rights reserved © 2025/ 2026 |
, Page |3
Amortization
Ans: paying off of debt with a fixed schedule in regular
installments over time, therefore, a fully amortized loan is one
that is paid back over the term of the loan (most frequently 15 -,
20-, and 30-year periods) through a set number of equal
payments.
promissory note
Ans: piece of the mortgage loan contract committing the
borrower to pay back the loaned money.
Second Mortgages
Ans: loan that is secured by a property that is already collateral
for another mortgage, generally a first mortgage.
Type of Second Mortgages Often Issued
Ans: -Home Equity Loans
-Home Equity Line of Credit (HELOC
Home Equity Loans
All rights reserved © 2025/ 2026 |
, Page |4
Ans: Home equity loans are standard lump-sum loans that
convert the equity of a house into usable funds.
Home Equity Line of Credit (HELOC
Ans: Almost like Home Equity Loans-The difference is that
home equity lines of credit operate more like credit cards.
Instead of a lump sum disbursement, the borrower is allowed to
use the line of credit whenever they des ire.
Wraparound Mortgages
Ans: The wraparound loan, or a "wrap," is a form of creative
financing, that may or may not be allowed with a homeowner's
original loan. It is a secondary loan for real property, that
'wraps around' the first loan, without paying it off.
Chattel Mortgages
Ans: A chattel mortgage is a mortgage loan that is secured by
some form of personal property that is not tied to a piece of
land. Like a standard mortgage loan, the borrower transfers
ownership of the personal property, like a car or boat, to the
lender until the loan is paid off.
Deeds of Trust
All rights reserved © 2025/ 2026 |
