IL Real Estate Broker PSI Practice Exam questions with
verified answers
A builder is obtaining a construction loan $95,000 for a single-family residence.
Under the Truth-in-Lending Act, disclosure of a prepayment penalty by the lender
is Ans✓✓✓ not required for a business loan.
A buyer bought a home from an owner. The owners green to owner-finance the
property. The parties agreed to amortize the loan over 15-year period. the buyer
became the owner of record of the property, and the seller had a lien against the
property. What type of instrument was used to purchase the property? Ans✓✓✓
A purchase money mortgage. The buyer squires legal title and the seller has a lien
against the property
A buyer bought a house in a subdivision zoned residential. The buyer wanted to
open a day care in the home. To do so legally, the buyer should obtain a
Ans✓✓✓ conditional use permit. AKA: special use zoning
A buyer has a properly executed option with a seller to buy a property, which runs
through September 15. The buyer decides not to exercise the option. What
should the seller do to terminate the option? Ans✓✓✓ Nothing, as the option
expires automatically
A buyer signs a contract to purchase a house, but then attempts to have the
contract voided. He is able to prove that he was legally mentally ill when he
signed the contract. Will the buyer likely have the contract declared void?
Ans✓✓✓ Yes, because his mental illness renders the contract voidable
A buyer wants a high initial equity investment in a house. Which of the following
should the buyer seek as part of the mortgage terms on the house? Ans✓✓✓
,Largest down payment. An equity investment refers to the amount of monetary
interest an owner has in the property over and above any mortgage
indebtedness.
A church owns a retirement home and restricts the rental of the units to church
members regardless of age, sex, race, color, or national origin. Is this policy a
violation of federal fair housing laws? Ans✓✓✓ No, because religious
organizations may limit occupancy of dwelling units they own to persons of the
same religion.
A couple leased a waterfront bungalow. The Lease began on June 15, 2012, and
continued through July 31, 2010. The couple had Ans✓✓✓ An estate for years
A couple's yearly income is $87,400. The couple's bank currently allows residential
loans for an amount equal to twice the annual income. Disregarding minimum
percentage down payment requirements, what is the minimum cash down
payment that the couple will need to have on a $210,000 home? Ans✓✓✓
$35,200. The couple would have to make up any difference between the loan
amount and the purchase price of the property in the form of a down payment.
Since their joint incomes equal $87,4000, the bank will loan twice that amount, or
$174,800. The purchase price of the property is $210,000, minus the loan amount
of $174,800, equals a required down payment in the amount of $35,200
A deed restriction in a subdivision created a community playground that used a
few square feet from the rear of every owner's lot. An owner has begun making
plans to convert the rear half of his lot to a garden. The plans would require the
removal of park equipment. A neighbor objects to these plans. The neighbor
should Ans✓✓✓ apply for a court injunction against the owner's plans.
, A farmer continuously plowed and planted an unused field that neighbored his
property for the statutory period of time set by state law. He did not have the
owner's permission to do this. After the statutory time period, the farmer put in a
claim of ownership. He may become the owner of the land through Ans✓✓✓
adverse possession is acquiring title to real estate owned by someone else. The
use must have been continuous for the time period set by state law, and without
the owners permission
A home equity line of credit is Ans✓✓✓ a secured loan
A landlord had a property that produced a 12% rate of return. The net income on
the property was $1,050 a month. Based on the income approach to value, what
was the market value of the property? Ans✓✓✓ $105,000. Annual net income
divided by the rate of return will equal value. $1,050 a month x 12 = $12,600 /
0.12 rate of return = $105,000 value
A licensee anxious to make a sale violates his duties toward his principal if he
volunteers which of the following pieces of information to a prospective buyer?
Ans✓✓✓ You should make an offer for less than the listing price because the
owner is anxious to sell
A licensee has a property under contract with a financing contingency. The
mortgage lender calls the licensee and asks if the contract price on a property can
be decreased by $5,000. The mortgage lender explains that this will help the
buyer qualify for a loan and help the seller close. Which of the following should
the licensee do? Ans✓✓✓ Explain that she is not authorized to make this change
without written consent to the parties
A licensee is listing a rural property. The property was owned by a woman who is
now deceased. The woman had six grown children. Two of the sons are listing the
verified answers
A builder is obtaining a construction loan $95,000 for a single-family residence.
Under the Truth-in-Lending Act, disclosure of a prepayment penalty by the lender
is Ans✓✓✓ not required for a business loan.
A buyer bought a home from an owner. The owners green to owner-finance the
property. The parties agreed to amortize the loan over 15-year period. the buyer
became the owner of record of the property, and the seller had a lien against the
property. What type of instrument was used to purchase the property? Ans✓✓✓
A purchase money mortgage. The buyer squires legal title and the seller has a lien
against the property
A buyer bought a house in a subdivision zoned residential. The buyer wanted to
open a day care in the home. To do so legally, the buyer should obtain a
Ans✓✓✓ conditional use permit. AKA: special use zoning
A buyer has a properly executed option with a seller to buy a property, which runs
through September 15. The buyer decides not to exercise the option. What
should the seller do to terminate the option? Ans✓✓✓ Nothing, as the option
expires automatically
A buyer signs a contract to purchase a house, but then attempts to have the
contract voided. He is able to prove that he was legally mentally ill when he
signed the contract. Will the buyer likely have the contract declared void?
Ans✓✓✓ Yes, because his mental illness renders the contract voidable
A buyer wants a high initial equity investment in a house. Which of the following
should the buyer seek as part of the mortgage terms on the house? Ans✓✓✓
,Largest down payment. An equity investment refers to the amount of monetary
interest an owner has in the property over and above any mortgage
indebtedness.
A church owns a retirement home and restricts the rental of the units to church
members regardless of age, sex, race, color, or national origin. Is this policy a
violation of federal fair housing laws? Ans✓✓✓ No, because religious
organizations may limit occupancy of dwelling units they own to persons of the
same religion.
A couple leased a waterfront bungalow. The Lease began on June 15, 2012, and
continued through July 31, 2010. The couple had Ans✓✓✓ An estate for years
A couple's yearly income is $87,400. The couple's bank currently allows residential
loans for an amount equal to twice the annual income. Disregarding minimum
percentage down payment requirements, what is the minimum cash down
payment that the couple will need to have on a $210,000 home? Ans✓✓✓
$35,200. The couple would have to make up any difference between the loan
amount and the purchase price of the property in the form of a down payment.
Since their joint incomes equal $87,4000, the bank will loan twice that amount, or
$174,800. The purchase price of the property is $210,000, minus the loan amount
of $174,800, equals a required down payment in the amount of $35,200
A deed restriction in a subdivision created a community playground that used a
few square feet from the rear of every owner's lot. An owner has begun making
plans to convert the rear half of his lot to a garden. The plans would require the
removal of park equipment. A neighbor objects to these plans. The neighbor
should Ans✓✓✓ apply for a court injunction against the owner's plans.
, A farmer continuously plowed and planted an unused field that neighbored his
property for the statutory period of time set by state law. He did not have the
owner's permission to do this. After the statutory time period, the farmer put in a
claim of ownership. He may become the owner of the land through Ans✓✓✓
adverse possession is acquiring title to real estate owned by someone else. The
use must have been continuous for the time period set by state law, and without
the owners permission
A home equity line of credit is Ans✓✓✓ a secured loan
A landlord had a property that produced a 12% rate of return. The net income on
the property was $1,050 a month. Based on the income approach to value, what
was the market value of the property? Ans✓✓✓ $105,000. Annual net income
divided by the rate of return will equal value. $1,050 a month x 12 = $12,600 /
0.12 rate of return = $105,000 value
A licensee anxious to make a sale violates his duties toward his principal if he
volunteers which of the following pieces of information to a prospective buyer?
Ans✓✓✓ You should make an offer for less than the listing price because the
owner is anxious to sell
A licensee has a property under contract with a financing contingency. The
mortgage lender calls the licensee and asks if the contract price on a property can
be decreased by $5,000. The mortgage lender explains that this will help the
buyer qualify for a loan and help the seller close. Which of the following should
the licensee do? Ans✓✓✓ Explain that she is not authorized to make this change
without written consent to the parties
A licensee is listing a rural property. The property was owned by a woman who is
now deceased. The woman had six grown children. Two of the sons are listing the
