RESIDENTIAL REAL ESTATE RECA
TERMS EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
Modular Construction - Answer-Involves manufacturing the 3-D units that are combined
to create a cohesive look.
Panelized Construction - Answer-Involves creation of prefabricated wall, floor, or roof
panels.
Ground Circuit Fault Interrupter - Answer-A type of electrical outlet that includes a test
and reset button and should be installed in areas where water may come into contact
with electricity.
Patent Defect - Answer-An OBVIOUS flaw that can be discovered upon reasonable
inspection of the property (broken window pane, cracks in cement driveway, etc.)
Latent Defects - Answer-A defect that is not known to either the seller or the buyer at
the time of the sale. These defects do NOT make the property dangerous.
Material Latent Defects - Answer-A defect that is not visible upon ordinary inspection of
the property. Can be an issue that affects the value of the property OR . poses an
unreasonable risk to people. Examples: flood damage, concealed crack in foundation
wall, etc.
Conventional Mortgage - Answer-A loan that does not exceed 80% of the appraised
value or purchase price of the property, whichever is less.
High Ratio Mortgage - Answer-A loan for MORE than 80% of the appraised value or
purchase price of the property, whichever is less.
Open Mortgage - Answer-Allows the borrower to prepay all or part of the principle
amount at any time with or without notice, penalty, or extra charges.
Typically have shorter terms and carry higher interest rates to compensate for their
increased payment flexibility.
Closed Mortgage - Answer-One that cannot repaid without prepayment penalties during
its term, except as permitted in the mortgage agreement.
Less prepayment flexibility than an open mortgage.
TERMS EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
Modular Construction - Answer-Involves manufacturing the 3-D units that are combined
to create a cohesive look.
Panelized Construction - Answer-Involves creation of prefabricated wall, floor, or roof
panels.
Ground Circuit Fault Interrupter - Answer-A type of electrical outlet that includes a test
and reset button and should be installed in areas where water may come into contact
with electricity.
Patent Defect - Answer-An OBVIOUS flaw that can be discovered upon reasonable
inspection of the property (broken window pane, cracks in cement driveway, etc.)
Latent Defects - Answer-A defect that is not known to either the seller or the buyer at
the time of the sale. These defects do NOT make the property dangerous.
Material Latent Defects - Answer-A defect that is not visible upon ordinary inspection of
the property. Can be an issue that affects the value of the property OR . poses an
unreasonable risk to people. Examples: flood damage, concealed crack in foundation
wall, etc.
Conventional Mortgage - Answer-A loan that does not exceed 80% of the appraised
value or purchase price of the property, whichever is less.
High Ratio Mortgage - Answer-A loan for MORE than 80% of the appraised value or
purchase price of the property, whichever is less.
Open Mortgage - Answer-Allows the borrower to prepay all or part of the principle
amount at any time with or without notice, penalty, or extra charges.
Typically have shorter terms and carry higher interest rates to compensate for their
increased payment flexibility.
Closed Mortgage - Answer-One that cannot repaid without prepayment penalties during
its term, except as permitted in the mortgage agreement.
Less prepayment flexibility than an open mortgage.
