REAL 4000 UGA Test 2 Practice Questions and Answers

REAL 4000 UGA Test 2 Practice Questions and Answers the home valuation code of conduct was designed to - Answer️️ - decrease the lender's ability to influence appraisals all else equal, a higher discount rate will... - Answer️️ -DECREASE the PV of future cash flows the feasibility of new construction is dependent on the relationship btwn current property prices + cost of new construction. the supply of properties will increase if... - Answer️️ -the current property values are greater than the cost of construction (all about profit @ the end of the day) what is the direct capitalization method anyway? - Answer️️ -it's when the value estimates are based on a multiple of expected first year net operating income (NOI) what is a capital expenditure (capx)? - Answer️️ -an expense that will add long-term value to the home (ex: a roof replacement) ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM UNIVERSITY OF NORTH TEXAS AT DALLAS 2 basic direct cap equation? - Answer️️ -projected first year NOI / overall cap rate when do you use PMT? - Answer️️ -when there are monthly payments involved (called an annuity) how are cap rates for commercial properties related to risk? - Answer️️ -cap rates are directly related to the perceived risk of the property. EGIM method of valuation - Answer️️ -sale price / effective gross income (make sure to calculate EGI for the right time frame ex: annual, monthly, etc) cost approach of valuation - Answer️️ -reproduction/replacement cost + any additional value - depreciation = indicated value what compounding frequency will give you the greatest return? - Answer️️ -daily. basically the more often your principal amt is compounded, the more money you'll make (duh) will the future value of an annuity due be greater or less than that of a regular annuity? - Answer️️ -it will be greater!! why? idk in the sales comparison approach, you start with the sales price of the ______________ and adjust it - Answer️️ -you start with the ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM UNIVERSITY OF NORTH TEXAS AT DALLAS 3 comp and adjust it depending on how it compares to the subject property how do you calculate IRR? - Answer️️ -use the calc haha and have all the other cash flows. also negate the value that is being paid! which have higher interest loans: conforming or nonconforming loans? - Answer️️ -non-conforming loans why? they can't be easily sold in the secondary mortgage mkt and are less liquid so there's more risk associated w/ them is the cap rate the same as the discount rate? - Answer️️ -NO!!!! what are the two parts of an adjustable rate mortgage (ARM)? - Answer️️ -margin - the fixed part index - the adjustable part in an ARM, what is the temporarily reduced interest rate called? - Answer️️ -the teaser rate what is the escrow clause? - Answer️️ -when the borrower makes monthly deposits into an escrow account to pay for property taxes, HOA fees, etc. ©SOPHIABENNET@2024/2025 Wednesday, August 21, 2024 12:13 PM UNIVERSITY OF NORTH TEXAS AT DALLAS 4 what are recourse loans? - Answer️️ -these are standard home loans in which the borrower is personally liable if they default on a loan what are non-recourse loans? - Answer️️ -loans that are secured by collateral. the loan issuer can only seize the collateral that the borrower put down if they default and cannot get any other payment. will non-recourse or recourse loans have higher interest rates? - Answer️️ -non-recourse loans (more risk) when is PMI (private mortgage insurance) usually required? - Answer️️ -when you're taking out a loan with LTV ratios gr