Champions School of Real Estate - Real
Estate Finance Exam 2025 || Questions
& Answers (100% Verified)
An upfront payment of points used to reduce the borrower's monthly payment - by
paying points at closing a borrower may secure a lower rate on the loan. - ANSWER -
Buy Down
A clause outlining the obligations of the original borrower and a new borrower in the
event the loan is assumed. - ANSWER - Assumption Clause
Lender under a mortgage - ANSWER - Mortgagee
The action of pledging real property as security for a debt - ANSWER - Hypothecation
A loan with an investor/lender who collects principal and interest payments and then a
percent of the profits when the property is sold. - ANSWER - Shared Appreciation Loan
Borrower under a mortgage - ANSWER - Mortgagor
A loan that is neither federally insured nor guaranteed - a private sector loan. -
ANSWER - Conventional Loan
Two or more lenders own a share - to lessen the lenders' risk; or one lender who
collects principal and interest plus a percent of the profits on the investment property. -
ANSWER - Participation Loan
An individual who coordinates the loan application process for the lender. - ANSWER -
Loan Processor
A standardized conventional loan written on uniform documents that meets the
purchase requirements of Fannie Mae and Freddie Mac - both loan amount and
borrower characteristics must meet the guidelines. - ANSWER - Conforming Loan
The percent of monthly gross income that can be used to pay the PITI payment on a
mortgage loan, and the percent of monthly gross that can be used to cover all debt
including the PITI - 28%-36% would be typical debt ratios. - ANSWER - Qualifying
Ratios, Debt Ratios
Foreclosure that does not require court proceedings or a judgement of foreclosure - the
result of the power of sale clause in a deed of trust. - ANSWER - Non-judicial
Foreclosure
, Government and private programs whose stated purpose is to help buyers to become
homeowners. - ANSWER - Down Payment Assistance Programs
Mortgage insurance premium - insurance on the FHA loan - insures the whole loan. -
ANSWER - MIP
A clause allowing the lender to raise the existing interest rate - although most often
associated with an Adjustable Rate Mortgage, it can be used to overcome an alienation
clause. - ANSWER - Escalation Clause
A pledge of real property as security for a debt. - ANSWER - Mortgage
Truth in Lending Act - RESPA Integrated Disclosures - ANSWER – TRID
A loan unable to be sold to Fannie Mae or Freddie Mac (i.e. A sub-prime loan) -
ANSWER - Non-Conforming Loan
VA - ANSWER - Veteran's administration - assists veterans in the purchase of housing
by guaranteeing loans)
Seller's equity - ANSWER - Cash price minus the loan balance
A clause often found in a blanket loan allowing the borrower to obtain partial releases of
specific lots by making required lump sum payments. - ANSWER - Release Clause
One percent of a loan that is a loan processing fee - ANSWER - Origination Point
The repayment or satisfaction of a debt by installment payments of principal and interest
on a regular basis. - ANSWER - Amortization
A law allowing individuals to inspect their credit files, correct errors and attach
explanatory statements. - ANSWER - Fair Credit Reporting Act (FCRA)
A law requiring lenders to meet the needs of the community in which they are chartered
to do business. - ANSWER - Community Reinvestment Act
A clause allowing a lender to move to or take a lower lien position. - ANSWER -
Subordination Clause
A loan whose payments start low and rise every year, usually for five years, after which
they level off for the remaining term of the loan - can result in negative amortization. -
ANSWER - Graduated Payment Mortgage (GPM)
An increase in debt due to payments less than the interest owed - can be associated
with a graduated payment mortgage. - ANSWER - Negative Amortization
Estate Finance Exam 2025 || Questions
& Answers (100% Verified)
An upfront payment of points used to reduce the borrower's monthly payment - by
paying points at closing a borrower may secure a lower rate on the loan. - ANSWER -
Buy Down
A clause outlining the obligations of the original borrower and a new borrower in the
event the loan is assumed. - ANSWER - Assumption Clause
Lender under a mortgage - ANSWER - Mortgagee
The action of pledging real property as security for a debt - ANSWER - Hypothecation
A loan with an investor/lender who collects principal and interest payments and then a
percent of the profits when the property is sold. - ANSWER - Shared Appreciation Loan
Borrower under a mortgage - ANSWER - Mortgagor
A loan that is neither federally insured nor guaranteed - a private sector loan. -
ANSWER - Conventional Loan
Two or more lenders own a share - to lessen the lenders' risk; or one lender who
collects principal and interest plus a percent of the profits on the investment property. -
ANSWER - Participation Loan
An individual who coordinates the loan application process for the lender. - ANSWER -
Loan Processor
A standardized conventional loan written on uniform documents that meets the
purchase requirements of Fannie Mae and Freddie Mac - both loan amount and
borrower characteristics must meet the guidelines. - ANSWER - Conforming Loan
The percent of monthly gross income that can be used to pay the PITI payment on a
mortgage loan, and the percent of monthly gross that can be used to cover all debt
including the PITI - 28%-36% would be typical debt ratios. - ANSWER - Qualifying
Ratios, Debt Ratios
Foreclosure that does not require court proceedings or a judgement of foreclosure - the
result of the power of sale clause in a deed of trust. - ANSWER - Non-judicial
Foreclosure
, Government and private programs whose stated purpose is to help buyers to become
homeowners. - ANSWER - Down Payment Assistance Programs
Mortgage insurance premium - insurance on the FHA loan - insures the whole loan. -
ANSWER - MIP
A clause allowing the lender to raise the existing interest rate - although most often
associated with an Adjustable Rate Mortgage, it can be used to overcome an alienation
clause. - ANSWER - Escalation Clause
A pledge of real property as security for a debt. - ANSWER - Mortgage
Truth in Lending Act - RESPA Integrated Disclosures - ANSWER – TRID
A loan unable to be sold to Fannie Mae or Freddie Mac (i.e. A sub-prime loan) -
ANSWER - Non-Conforming Loan
VA - ANSWER - Veteran's administration - assists veterans in the purchase of housing
by guaranteeing loans)
Seller's equity - ANSWER - Cash price minus the loan balance
A clause often found in a blanket loan allowing the borrower to obtain partial releases of
specific lots by making required lump sum payments. - ANSWER - Release Clause
One percent of a loan that is a loan processing fee - ANSWER - Origination Point
The repayment or satisfaction of a debt by installment payments of principal and interest
on a regular basis. - ANSWER - Amortization
A law allowing individuals to inspect their credit files, correct errors and attach
explanatory statements. - ANSWER - Fair Credit Reporting Act (FCRA)
A law requiring lenders to meet the needs of the community in which they are chartered
to do business. - ANSWER - Community Reinvestment Act
A clause allowing a lender to move to or take a lower lien position. - ANSWER -
Subordination Clause
A loan whose payments start low and rise every year, usually for five years, after which
they level off for the remaining term of the loan - can result in negative amortization. -
ANSWER - Graduated Payment Mortgage (GPM)
An increase in debt due to payments less than the interest owed - can be associated
with a graduated payment mortgage. - ANSWER - Negative Amortization
