PSI Real Estate Exam 2018 Michigan
acceleration clause - correct answer ✔✔A clause in your mortgage which allows the lender to demand
payment of the
outstanding loan balance for various reasons. The most common reasons for
accelerating a loan are if the borrower defaults on the loan or transfers title to
another individual without informing the lender.
adjustable-rate mortgage (ARM) - correct answer ✔✔A mortgage in which the interest changes
periodically, according to
corresponding fluctuations in an index. All ARMs are tied to indexes.
adjustment date - correct answer ✔✔The date the interest rate changes on an adjustable-rate mortgage
amortization - correct answer ✔✔The loan payment consists of a portion which will be applied to pay
the accruing
interest on a loan, with the remainder being applied to the principal. Over time,
the interest portion decreases as the loan balance decreases, and the amount
applied to principal increases so that the loan is paid off (amortized) in the
specified time
amortization schedule - correct answer ✔✔A table which shows how much of each payment will be
applied toward principal
and how much toward interest over the life of the loan. It also shows the gradual
decrease of the loan balance until it reaches zero.
annual percentage rate (APR) - correct answer ✔✔This is not the note rate on your loan. It is a value
created according to a
government formula intended to reflect the true annual cost of borrowing,
,expressed as a percentage. It works sort of like this, but not exactly, so only use
this as a guideline: deduct the closing costs from your loan amount, then using
your actual loan payment, calculate what the interest rate would be on this
amount instead of your actual loan amount. You will come up with a number
close to the APR. Because you are using the same payment on a smaller
amount, the APR is always higher than the actual not rate on your loan.
application - correct answer ✔✔The form used to apply for a mortgage loan, containing information
about a
borrower's income, savings, assets, debts, and more.
appraisal - correct answer ✔✔A written justification of the price paid for a property, primarily based on
an
analysis of comparable sales of similar homes nearby.
appraised value - correct answer ✔✔An opinion of a property's fair market value, based on an
appraiser's knowledge,
experience, and analysis of the property. Since an appraisal is based primarily on
comparable sales, and the most recent sale is the one on the property in
question, the appraisal usually comes out at the purchase price.
appraiser - correct answer ✔✔An individual qualified by education, training, and experience to estimate
the
value of real property and personal property. Although some appraisers work
directly for mortgage lenders, most are independent.
appreciation - correct answer ✔✔The increase in the value of a property due to changes in market
conditions,
inflation, or other causes.
,assessed value - correct answer ✔✔The valuation placed on property by a public tax assessor for
purposes of
taxation.
assessment - correct answer ✔✔The placing of a value on property for the purpose of taxation.
assessor - correct answer ✔✔A public official who establishes the value of a property for taxation
purposes.
asset - correct answer ✔✔Items of value owned by an individual. Assets that can be quickly converted
into
cash are considered "liquid assets." These include bank accounts, stocks, bonds,
mutual funds, and so on. Other assets include real estate, personal property, and
debts owed to an individual by others.
assignment - correct answer ✔✔When ownership of your mortgage is transferred from one company or
individual
to another, it is called an assignment.
assumable mortgage - correct answer ✔✔A mortgage that can be assumed by the buyer when a home is
sold. Usually, the
borrower must "qualify" in order to assume the loan.
assumption - correct answer ✔✔The term applied when a buyer assumes the seller's mortgage.
balloon mortgage - correct answer ✔✔A mortgage loan that requires the remaining principal balance be
paid at a
specific point in time. For example, a loan may be amortized as if it would be paid
over a thirty year period, but requires that at the end of the tenth year the entire
remaining balance must be paid.
, balloon payment - correct answer ✔✔The final lump sum payment that is due at the termination of a
balloon mortgage.
bankruptcy - correct answer ✔✔By filing in federal bankruptcy court, an individual or individuals can
restructure or
relieve themselves of debts and liabilities. Bankruptcies are of various types, but
the most common for an individual seem to be a "Chapter 7 No Asset"
bankruptcy which relieves the borrower of most types of debts. A borrower
cannot usually qualify for an "A" paper loan for a period of two years after the
bankruptcy has been discharged and requires the re-establishment of an ability
to repay debt.
bill of sale - correct answer ✔✔A written document that transfers title to personal property. For
example, when
selling an automobile to acquire funds which will be used as a source of down
payment or for closing costs, the lender will usually require the bill of sale (in
addition to other items) to help document this source of funds.
biweekly mortgage - correct answer ✔✔A mortgage in which you make payments every two weeks
instead of once a
month. The basic result is that instead of making twelve monthly payments
during the year, you make thirteen. The extra payment reduces the principal,
substantially reducing the time it takes to pay off a thirty year mortgage. Note:
there are independent companies that encourage you to set up bi-weekly
payment schedules with them on your thirty year mortgage. They charge a set-up
fee and a transfer fee for every payment. Your funds are deposited into a trust
account from which your monthly payment is then made, and the excess funds
then remain in the trust account until enough has accrued to make the additional
payment which will then be paid to reduce your principle. You could save money
by doing the same thing yourself, plus you have to have faith that once you
acceleration clause - correct answer ✔✔A clause in your mortgage which allows the lender to demand
payment of the
outstanding loan balance for various reasons. The most common reasons for
accelerating a loan are if the borrower defaults on the loan or transfers title to
another individual without informing the lender.
adjustable-rate mortgage (ARM) - correct answer ✔✔A mortgage in which the interest changes
periodically, according to
corresponding fluctuations in an index. All ARMs are tied to indexes.
adjustment date - correct answer ✔✔The date the interest rate changes on an adjustable-rate mortgage
amortization - correct answer ✔✔The loan payment consists of a portion which will be applied to pay
the accruing
interest on a loan, with the remainder being applied to the principal. Over time,
the interest portion decreases as the loan balance decreases, and the amount
applied to principal increases so that the loan is paid off (amortized) in the
specified time
amortization schedule - correct answer ✔✔A table which shows how much of each payment will be
applied toward principal
and how much toward interest over the life of the loan. It also shows the gradual
decrease of the loan balance until it reaches zero.
annual percentage rate (APR) - correct answer ✔✔This is not the note rate on your loan. It is a value
created according to a
government formula intended to reflect the true annual cost of borrowing,
,expressed as a percentage. It works sort of like this, but not exactly, so only use
this as a guideline: deduct the closing costs from your loan amount, then using
your actual loan payment, calculate what the interest rate would be on this
amount instead of your actual loan amount. You will come up with a number
close to the APR. Because you are using the same payment on a smaller
amount, the APR is always higher than the actual not rate on your loan.
application - correct answer ✔✔The form used to apply for a mortgage loan, containing information
about a
borrower's income, savings, assets, debts, and more.
appraisal - correct answer ✔✔A written justification of the price paid for a property, primarily based on
an
analysis of comparable sales of similar homes nearby.
appraised value - correct answer ✔✔An opinion of a property's fair market value, based on an
appraiser's knowledge,
experience, and analysis of the property. Since an appraisal is based primarily on
comparable sales, and the most recent sale is the one on the property in
question, the appraisal usually comes out at the purchase price.
appraiser - correct answer ✔✔An individual qualified by education, training, and experience to estimate
the
value of real property and personal property. Although some appraisers work
directly for mortgage lenders, most are independent.
appreciation - correct answer ✔✔The increase in the value of a property due to changes in market
conditions,
inflation, or other causes.
,assessed value - correct answer ✔✔The valuation placed on property by a public tax assessor for
purposes of
taxation.
assessment - correct answer ✔✔The placing of a value on property for the purpose of taxation.
assessor - correct answer ✔✔A public official who establishes the value of a property for taxation
purposes.
asset - correct answer ✔✔Items of value owned by an individual. Assets that can be quickly converted
into
cash are considered "liquid assets." These include bank accounts, stocks, bonds,
mutual funds, and so on. Other assets include real estate, personal property, and
debts owed to an individual by others.
assignment - correct answer ✔✔When ownership of your mortgage is transferred from one company or
individual
to another, it is called an assignment.
assumable mortgage - correct answer ✔✔A mortgage that can be assumed by the buyer when a home is
sold. Usually, the
borrower must "qualify" in order to assume the loan.
assumption - correct answer ✔✔The term applied when a buyer assumes the seller's mortgage.
balloon mortgage - correct answer ✔✔A mortgage loan that requires the remaining principal balance be
paid at a
specific point in time. For example, a loan may be amortized as if it would be paid
over a thirty year period, but requires that at the end of the tenth year the entire
remaining balance must be paid.
, balloon payment - correct answer ✔✔The final lump sum payment that is due at the termination of a
balloon mortgage.
bankruptcy - correct answer ✔✔By filing in federal bankruptcy court, an individual or individuals can
restructure or
relieve themselves of debts and liabilities. Bankruptcies are of various types, but
the most common for an individual seem to be a "Chapter 7 No Asset"
bankruptcy which relieves the borrower of most types of debts. A borrower
cannot usually qualify for an "A" paper loan for a period of two years after the
bankruptcy has been discharged and requires the re-establishment of an ability
to repay debt.
bill of sale - correct answer ✔✔A written document that transfers title to personal property. For
example, when
selling an automobile to acquire funds which will be used as a source of down
payment or for closing costs, the lender will usually require the bill of sale (in
addition to other items) to help document this source of funds.
biweekly mortgage - correct answer ✔✔A mortgage in which you make payments every two weeks
instead of once a
month. The basic result is that instead of making twelve monthly payments
during the year, you make thirteen. The extra payment reduces the principal,
substantially reducing the time it takes to pay off a thirty year mortgage. Note:
there are independent companies that encourage you to set up bi-weekly
payment schedules with them on your thirty year mortgage. They charge a set-up
fee and a transfer fee for every payment. Your funds are deposited into a trust
account from which your monthly payment is then made, and the excess funds
then remain in the trust account until enough has accrued to make the additional
payment which will then be paid to reduce your principle. You could save money
by doing the same thing yourself, plus you have to have faith that once you
