Champions School Of Real Estate
National/State Finance Exam 2025 ||
Questions & Answers (100% Correct)
Construction Loan - ANSWER - short term financing with funds advanced periodically
during the stages of construction - a term loan
Prepayment Clause - ANSWER - A clause stating that the borrower can pay the entire
amount or the stated amount prior to the due date in the note and whether there will be
a penalty associated with that prepayment
Straight Loan - ANSWER - A loan with payments of interest only until the end of the
term, when the entire principal is repaid in one lump sum- a zero amortization loan- a
term loan
Prime Rate - ANSWER - The interest rate commercial banks charge their preferred
customers
Discount Point - ANSWER - One percent of the loan that is prepaid interest, tax
deductible and results in increased yield for the lender
APR - ANSWER - Annual percentage rate- a number that tells a borrower the total cost
of a loan- not just interest, the sum of all charges associated with the loan
Power of Sale - ANSWER - A clause in a deed of trust allowing non-judicial foreclosure
Conforming Loan - ANSWER - 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
Funding Fee - ANSWER - A fee required to be paid by the buyer, seller or included in
the loan at closing on all VA loans
Loan Estimate - ANSWER - A combination of the TILA initial disclosure and the RESPA
good faith estimate which must be provided to a buyer at the time of, or within three
days of loan application
Non-Conforming Loan - ANSWER - A loan unable to be sold to Fannie Mae or Freddie
Mac - for example a sub-prime loan
Conventional Loan - ANSWER - a loan that is neither federally insured nor guaranteed -
a private sector loan
, PMI - ANSWER - Private Mortgage Insurance - the private of FHA insurance - allowing
for high LTV / low down payment conventional loans - PMI insures the lender's risk.
Fixed Rate Amortized Loan - ANSWER - A loan with equal regular payments of
principal and interest until the debt is fully repaid or amortized
secondary market - ANSWER - Where lenders go to borrow money - Fannie Mae,
Ginnie Mae, Freddie Mac
Blanket Loan - ANSWER - Several pieces of property secured by a single loan (several
lots on one note)
Package Loan - ANSWER - A loan secured by real property plus personal property
Down Payment Assistance Programs - ANSWER - Government and private programs
whose stated purpose is to help buyers to become homeowners
Subordination Clause - ANSWER - a clause allowing a lender to move to or take a
lower lien position
Mortgage - ANSWER - Lender under a mortgage
Non-Judicial Foreclosure - ANSWER - foreclosure that does not require court
proceedings or a judgment of foreclosure - the result of the power of sale clause in a
deed of trust
Lien Theory State - ANSWER - a state where the mortgage lender has a lien on the
property and the borrower has title
Release Clause - ANSWER - A clause often found in a blanket loan allowing the
borrower to obtain partial releases of specific lots by making required lump sum
payments
Trustee - ANSWER - A third party under a deed of trust who acts as an agent for the
lender
Title Theory State - ANSWER - A state where the mortgage lender has title to the
property until the debt is repaid
Qualifying Ratios, Debt Ratios - ANSWER - The percent of monthly gross income that
can be used to pay the PITI payment in 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
TRID - ANSWER - Truth in Lending Act - RESPA Integrated Disclosures
National/State Finance Exam 2025 ||
Questions & Answers (100% Correct)
Construction Loan - ANSWER - short term financing with funds advanced periodically
during the stages of construction - a term loan
Prepayment Clause - ANSWER - A clause stating that the borrower can pay the entire
amount or the stated amount prior to the due date in the note and whether there will be
a penalty associated with that prepayment
Straight Loan - ANSWER - A loan with payments of interest only until the end of the
term, when the entire principal is repaid in one lump sum- a zero amortization loan- a
term loan
Prime Rate - ANSWER - The interest rate commercial banks charge their preferred
customers
Discount Point - ANSWER - One percent of the loan that is prepaid interest, tax
deductible and results in increased yield for the lender
APR - ANSWER - Annual percentage rate- a number that tells a borrower the total cost
of a loan- not just interest, the sum of all charges associated with the loan
Power of Sale - ANSWER - A clause in a deed of trust allowing non-judicial foreclosure
Conforming Loan - ANSWER - 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
Funding Fee - ANSWER - A fee required to be paid by the buyer, seller or included in
the loan at closing on all VA loans
Loan Estimate - ANSWER - A combination of the TILA initial disclosure and the RESPA
good faith estimate which must be provided to a buyer at the time of, or within three
days of loan application
Non-Conforming Loan - ANSWER - A loan unable to be sold to Fannie Mae or Freddie
Mac - for example a sub-prime loan
Conventional Loan - ANSWER - a loan that is neither federally insured nor guaranteed -
a private sector loan
, PMI - ANSWER - Private Mortgage Insurance - the private of FHA insurance - allowing
for high LTV / low down payment conventional loans - PMI insures the lender's risk.
Fixed Rate Amortized Loan - ANSWER - A loan with equal regular payments of
principal and interest until the debt is fully repaid or amortized
secondary market - ANSWER - Where lenders go to borrow money - Fannie Mae,
Ginnie Mae, Freddie Mac
Blanket Loan - ANSWER - Several pieces of property secured by a single loan (several
lots on one note)
Package Loan - ANSWER - A loan secured by real property plus personal property
Down Payment Assistance Programs - ANSWER - Government and private programs
whose stated purpose is to help buyers to become homeowners
Subordination Clause - ANSWER - a clause allowing a lender to move to or take a
lower lien position
Mortgage - ANSWER - Lender under a mortgage
Non-Judicial Foreclosure - ANSWER - foreclosure that does not require court
proceedings or a judgment of foreclosure - the result of the power of sale clause in a
deed of trust
Lien Theory State - ANSWER - a state where the mortgage lender has a lien on the
property and the borrower has title
Release Clause - ANSWER - A clause often found in a blanket loan allowing the
borrower to obtain partial releases of specific lots by making required lump sum
payments
Trustee - ANSWER - A third party under a deed of trust who acts as an agent for the
lender
Title Theory State - ANSWER - A state where the mortgage lender has title to the
property until the debt is repaid
Qualifying Ratios, Debt Ratios - ANSWER - The percent of monthly gross income that
can be used to pay the PITI payment in 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
TRID - ANSWER - Truth in Lending Act - RESPA Integrated Disclosures
