Champions Principles of Real Estate 2 Questions And Answers With Verified Solutions

appraisal - value of a property maybe affected by social, economic, govt and environmental influences Loan-to-Value Ratio (LTV) - The percentage of value or sales price that a lender is willing to finance. limited appraisal report - exterior only/drive by inspection. deemed as low risk loan highest and best use of property - legal use that gives the greatest return Principal of Contribution - cost does not equal value Residential Mortgage Loan Originators (RMLO) - Must be certified licence holders and is mandated by the SAFE ACT (TX dept of savings and mortgage lending) Principle of Anticipation - purchase price is affected by the expectation of future appeal and benefits Principal of Substitution - value of a commodity is influenced by the cost of acquiring subsitute or comparable item Principal of progression - value of properties around yours goes up; so does yours Principal of Regression - The Value of more expensive home placed in a neighborhood of less expensive homes will drop in value Market Value - the most probable price a property should bring in a competitive and open market under fair conditions requisit to a fair isal process - The value of a property may be affected by social, economic, governmental and environmental influences. An appraiser must always be aware of these influences and possible changes in them that could affect market value. Three approaches to value - (1) The Sales Comparison Approach (2) The Cost Approach, (3) The Income Approach. Sales Comparison Approach - A value for existing properties method for comparing similar properties to the subject property. this is the best indicator. Market Data Approach - aka: sales comparison approach Physical Deterioration - Loss of value of a building from its reproduction cost, resulting from wear and tear over time. Functional Obsolescence - loss of desirability of the style, layout or function of an element of property over time External Obsolescence - Losses of property value caused by forces or conditions beyond the borders of the property. ie. zoning, highways promissary note - evidence of a lean. simply a note Foreclosure - secured property may be sold ti satisfy the unpaid promissory note. Primary Mortgage Market - the loan origination market where borrowers and lenders negotiate mortgage termsfunding - transferring funds to a title co for disbursement when loan is approved. Servicing - The process of collecting loan monthly payments, keeping records and balances, collecting and paying taxes and insurance Equal Credit Opportunity Act - federal law passed in 1974. doesn't include: gender or immigration status. consumers are given equal chance to obtain credit. - secondary market - exists for the purchase and sale of existing mortgages to investors Liquidity - provides a steady supply of funds to keep making loans yield - represents money earned on an investment Fannie Mae - began in 1938. largest investors in home mortgages in the secondary market Freddy Mac - began in 1970. purchases mortgages in the secondary market pre approval - buyers set more realistic pricing goals, better understanding of ability to pay, avoid showing property buyers cant afford, seller reassured buyer has sufficient income and credit to close the deal (is the best) loan to value ratio - % of the lesser appraised value or sale that the lender will lend Private Mortgage Insurance (PMI) - Found in conventional loans. type of insurance required when the LTV exceeds 80%. insures the difference government rights In land - Police PowerEminent Domain Taxation Escheat police power - right of government to regulate and control land. most common example is zoning buffer zone - area of land separating one land use from another (single family, apartments and retail) eminent domain - right of govt to take private land for public use. inverse condemnation - land owner sues govt to buy his land taxation - govt right to tax real estate ad valorem - according to value escheat - transferring real estate to the state cuz the owner died without a will and without heirs interstate land sales full disclosure act - passed by congress in 1968 to protect consumers from fraud in the sale or lease of land Comprehensive Environmental Response Compensation & liability ACT (CERLA) - .Clean up federal, state and native american. authority to clean up sites contaminated with hazardous substances, pollutants or contaminants Constructive Notice - record the deed (sign it), then moving in. it gives notice of moving in appreciation - the passive increase of the value of a parcel due to market forces. almost all parcels of land have the potential to appreciate in a rising market