National PSI Exam prep question and answers New!!
question like this will be on the test, learn the meaning
behind everything. 2025/2026
A broker is completing a CMA to determine the potential listing price of a seller's home. Which of
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
the following is NOT part of the final CMA given to the seller? - Correct Answers Highest and best
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
use evaluation. / An appraiser does a highest and best use evaluation, which does not appear in a
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
CMA.
Il`
Il` Houses in the local area have had an increase in sales price and a decrease in days on the market.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` A broker who is attempting to determine the current market value for a residential listing would
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` get the BEST estimate of value by using - Correct Answers comparables that are no more than six
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` months old. / In a changing market, the more recent the comparables, the more likely they are to
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` reflect upward or downward price changes.
Il` Il` Il` Il` Il`
Il` Rental rates have increased by 2% in the last six months. Which appraisal principle BEST explains
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` this rate increase? - Correct Answers Principle of supply and demand. / The principle of supply
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` and demand states that as fewer properties become available for rent or sale, the price owners
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` can charge will increase.
Il` Il` Il`
Il` The current monthly GRM in a neighborhood is 200, and the annual income is $24,000. What is
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` the estimated value of a property in this neighborhood? - Correct Answers $400,000 Monthly
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` GRM × monthly income = value. 200 × 2,000 ($24,000 ÷ 12) = $400,000.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` The subject property has two baths and one fireplace. The property across the street sold for
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` $181,000 and has two baths and two fireplaces. The property behind the subject sold for
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` $175,000 and has two baths and no fireplace. In the area, baths are worth $5,000 and fireplaces
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` are worth $3,000. What is the subject property worth? - Correct Answers $178,000. / Subject
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` PropertyComp 1$181,000Comp 2$175,0002 baths2 bathsno adjustment2 bathsno adjustment1 Il` Il` Il` Il` Il` Il` Il`
Il` fireplace2 fireplaces- $3,000No fireplace+ $3,000Adjusted price$178,000Adjusted price$178,000
Il` Il` Il` Il` Il` Il`
, Il` According to federal government lending regulations, a buyer purchasing a home must have an Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` appraisal for all the following types of financing EXCEPT - Correct Answers Seller carry. / All
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` government loans and any sold on the secondary market require an appraisal. A seller-carry loan, Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` or seller financing, may or may not require an appraisal.
Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` A buyer chooses a loan with an LTV ratio of 90%, which requires the purchase of PMI, instead of a
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` loan with an 80% LTV, which would not require the insurance. The buyer MOST likely made this
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` choice because - Correct Answers the buyer wants a smaller down payment, even though the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` buyer will have to pay PMI. / (private mortgage insurance) in order to bring a smaller down
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` payment to closing, which will mean a higher monthly payment. PMI protects lenders in case of
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` default.
Il` A buyer is getting a new mortgage with a 95% loan-to-value ratio. The final loan amount the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` lender will lend the buyer is determined by the - Correct Answers lower of the sales price or
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` appraised value. / The loan-to-value (LTV) ratio is determined by the lower of the sales price or
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` appraised value. Il`
Il` The difference between using a partially amortized loan or an interest-only term loan is that the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` partially amortized loan would result in - Correct Answers larger payments and a smaller balloon
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` payment. / In a partially amortized loan, the loan payments include a partial payment toward
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` principal. While the payments will be larger, the balloon payment will be smaller, due to some
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` principal payoff. With an interest-only loan, the original principal and the final balloon payment
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` are the same because there was no payment made toward the principal.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` A borrower is using leverage on a new home loan at 90% loan to value. The disadvantage of this
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` type of leveraging is that? - Correct Answers the borrower is at higher risk of defaulting on the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` loan. / Leverage is using someone else's money; the higher the leverage, the higher the risk of
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` default. Because leveraging implies a high LTV, equity does not build faster, and the loan may
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` require private mortgage insurance (PMI) if there is a small down payment.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` A property owner has a large amount of equity in his home but does not want to sell it to gain
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` access to his money. What type of loan could the owner use to access the equity in his home
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` without having to make monthly loan payments? - Correct Answers Reverse mortgage. / In a
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
question like this will be on the test, learn the meaning
behind everything. 2025/2026
A broker is completing a CMA to determine the potential listing price of a seller's home. Which of
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
the following is NOT part of the final CMA given to the seller? - Correct Answers Highest and best
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
use evaluation. / An appraiser does a highest and best use evaluation, which does not appear in a
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
CMA.
Il`
Il` Houses in the local area have had an increase in sales price and a decrease in days on the market.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` A broker who is attempting to determine the current market value for a residential listing would
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` get the BEST estimate of value by using - Correct Answers comparables that are no more than six
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` months old. / In a changing market, the more recent the comparables, the more likely they are to
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` reflect upward or downward price changes.
Il` Il` Il` Il` Il`
Il` Rental rates have increased by 2% in the last six months. Which appraisal principle BEST explains
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` this rate increase? - Correct Answers Principle of supply and demand. / The principle of supply
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` and demand states that as fewer properties become available for rent or sale, the price owners
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` can charge will increase.
Il` Il` Il`
Il` The current monthly GRM in a neighborhood is 200, and the annual income is $24,000. What is
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` the estimated value of a property in this neighborhood? - Correct Answers $400,000 Monthly
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` GRM × monthly income = value. 200 × 2,000 ($24,000 ÷ 12) = $400,000.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` The subject property has two baths and one fireplace. The property across the street sold for
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` $181,000 and has two baths and two fireplaces. The property behind the subject sold for
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` $175,000 and has two baths and no fireplace. In the area, baths are worth $5,000 and fireplaces
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` are worth $3,000. What is the subject property worth? - Correct Answers $178,000. / Subject
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` PropertyComp 1$181,000Comp 2$175,0002 baths2 bathsno adjustment2 bathsno adjustment1 Il` Il` Il` Il` Il` Il` Il`
Il` fireplace2 fireplaces- $3,000No fireplace+ $3,000Adjusted price$178,000Adjusted price$178,000
Il` Il` Il` Il` Il` Il`
, Il` According to federal government lending regulations, a buyer purchasing a home must have an Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` appraisal for all the following types of financing EXCEPT - Correct Answers Seller carry. / All
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` government loans and any sold on the secondary market require an appraisal. A seller-carry loan, Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` or seller financing, may or may not require an appraisal.
Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` A buyer chooses a loan with an LTV ratio of 90%, which requires the purchase of PMI, instead of a
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` loan with an 80% LTV, which would not require the insurance. The buyer MOST likely made this
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` choice because - Correct Answers the buyer wants a smaller down payment, even though the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` buyer will have to pay PMI. / (private mortgage insurance) in order to bring a smaller down
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` payment to closing, which will mean a higher monthly payment. PMI protects lenders in case of
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` default.
Il` A buyer is getting a new mortgage with a 95% loan-to-value ratio. The final loan amount the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` lender will lend the buyer is determined by the - Correct Answers lower of the sales price or
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` appraised value. / The loan-to-value (LTV) ratio is determined by the lower of the sales price or
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` appraised value. Il`
Il` The difference between using a partially amortized loan or an interest-only term loan is that the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` partially amortized loan would result in - Correct Answers larger payments and a smaller balloon
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` payment. / In a partially amortized loan, the loan payments include a partial payment toward
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` principal. While the payments will be larger, the balloon payment will be smaller, due to some
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` principal payoff. With an interest-only loan, the original principal and the final balloon payment
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` are the same because there was no payment made toward the principal.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` A borrower is using leverage on a new home loan at 90% loan to value. The disadvantage of this
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` type of leveraging is that? - Correct Answers the borrower is at higher risk of defaulting on the
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` loan. / Leverage is using someone else's money; the higher the leverage, the higher the risk of
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` default. Because leveraging implies a high LTV, equity does not build faster, and the loan may
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` require private mortgage insurance (PMI) if there is a small down payment.
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` A property owner has a large amount of equity in his home but does not want to sell it to gain
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` access to his money. What type of loan could the owner use to access the equity in his home
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
Il` without having to make monthly loan payments? - Correct Answers Reverse mortgage. / In a
Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il` Il`
