PSI REAL ESTATE SALESPERSON PRACTICE
QUESTIONS AND DETAILED SOLUTIONS
◉ installment note.
Answer: promissory note with specific principal and interest
◉ principle of Leverage.
Answer: business tool to earn profit like a landlord with rent
◉ FICO.
Answer: most commonly used credit rating system
◉ negative amortization.
Answer: payment is less than interest amount owing increases
◉ equity.
Answer: market value minus amount of existing liens
◉ Equitable Title.
Answer: right to obtain full ownership of the property right to use
,◉ legal title.
Answer: actual full ownership right to sell
◉ Regulation Z.
Answer: truth in lending law the regulations provided lenders and
those who help arrange credit for borrower specific guidelines to
follow in disclosing to borrowers their exact cost of credit must State
APR
◉ Federal Equal Credit Opportunity Act.
Answer: prohibits discrimination in lending because of race religion
sex national origin marital status or age
◉ truth in lending Tila.
Answer: promotes informed use of credit
◉ interest only loan.
Answer: interest-only is paid in early years a fully amortized loan is
acquired at a specific time mostly the same as a straight term
◉ buy Downs.
Answer: a builder buys down the loan 2% in the first year 1% in the
second the Builder pays the lender to make up the difference
,◉ budget mortgage loan Piti.
Answer: principal interest taxes and insurance the lender requires
1/12 of the taxes and insurance to be included in the payment
◉ purchase money mortgage loan.
Answer: Sutherlands money to buyer seller keeps deed until debt is
paid
◉ wrap-around mortgage loan.
Answer: a second or Junior mortgage includes balance of First
Mortgage plus additional financing needed rarely made
◉ reverse annuity mortgage Ram.
Answer: reverse mortgage primarily for the elderly or retired
◉ open-end mortgage loan.
Answer: equity loan a line of credit secured by a mortgage percent of
equity
◉ blanket mortgage loan.
Answer: usually for financing a subdivision
, ◉ private mortgage insurance PMI.
Answer: if the borrower puts less than 20% down the lender might
require
◉ PMI.
Answer: may possibly be eliminated when the loan-to-value is
reduced to below 80% of the original purchase price or a new
appraisal if a borrower does not request cancellation A lender will
automatically eliminate once the equity reaches 22%
◉ FHA mortgage loans federal housing Administration.
Answer: administered by the HUD Federal Department of Housing
and Urban Development does not make loans to cover this cost
mortgage insurance is charged at the origination of the loan
approved private lenders make these loans and approved appraiser
must have praised the property and identify any repairs to be made
before issuing a conditional commitment
◉ graduated payment mortgage GPM.
Answer: monthly payments are reduced in early years in exchange
for higher payments later in the anticipation of increased future
income payments increase over time
◉ non-judicial foreclosure.
QUESTIONS AND DETAILED SOLUTIONS
◉ installment note.
Answer: promissory note with specific principal and interest
◉ principle of Leverage.
Answer: business tool to earn profit like a landlord with rent
◉ FICO.
Answer: most commonly used credit rating system
◉ negative amortization.
Answer: payment is less than interest amount owing increases
◉ equity.
Answer: market value minus amount of existing liens
◉ Equitable Title.
Answer: right to obtain full ownership of the property right to use
,◉ legal title.
Answer: actual full ownership right to sell
◉ Regulation Z.
Answer: truth in lending law the regulations provided lenders and
those who help arrange credit for borrower specific guidelines to
follow in disclosing to borrowers their exact cost of credit must State
APR
◉ Federal Equal Credit Opportunity Act.
Answer: prohibits discrimination in lending because of race religion
sex national origin marital status or age
◉ truth in lending Tila.
Answer: promotes informed use of credit
◉ interest only loan.
Answer: interest-only is paid in early years a fully amortized loan is
acquired at a specific time mostly the same as a straight term
◉ buy Downs.
Answer: a builder buys down the loan 2% in the first year 1% in the
second the Builder pays the lender to make up the difference
,◉ budget mortgage loan Piti.
Answer: principal interest taxes and insurance the lender requires
1/12 of the taxes and insurance to be included in the payment
◉ purchase money mortgage loan.
Answer: Sutherlands money to buyer seller keeps deed until debt is
paid
◉ wrap-around mortgage loan.
Answer: a second or Junior mortgage includes balance of First
Mortgage plus additional financing needed rarely made
◉ reverse annuity mortgage Ram.
Answer: reverse mortgage primarily for the elderly or retired
◉ open-end mortgage loan.
Answer: equity loan a line of credit secured by a mortgage percent of
equity
◉ blanket mortgage loan.
Answer: usually for financing a subdivision
, ◉ private mortgage insurance PMI.
Answer: if the borrower puts less than 20% down the lender might
require
◉ PMI.
Answer: may possibly be eliminated when the loan-to-value is
reduced to below 80% of the original purchase price or a new
appraisal if a borrower does not request cancellation A lender will
automatically eliminate once the equity reaches 22%
◉ FHA mortgage loans federal housing Administration.
Answer: administered by the HUD Federal Department of Housing
and Urban Development does not make loans to cover this cost
mortgage insurance is charged at the origination of the loan
approved private lenders make these loans and approved appraiser
must have praised the property and identify any repairs to be made
before issuing a conditional commitment
◉ graduated payment mortgage GPM.
Answer: monthly payments are reduced in early years in exchange
for higher payments later in the anticipation of increased future
income payments increase over time
◉ non-judicial foreclosure.
