1 | Page
TEXAS REAL ESTATE FINANCE
PRACTICE EXAM 200 REVISION
QUESTION WITH ANSWERS NEW
UPDATE 2025
Which of the following default types would be considered a technical default?
failure to keep property in good repair
Which Texas agency licenses, regulates, and examines the trust- and insurance-
funded prepaid funeral contract sellers?
TExas department of banking
The Tax Reform Act of 1986 established an entity that can issue multiclass
securities. What is this entity called?
REMIC
What is the main advantage of a single-family home investment over other real
estate investments?
liquidity
Who is the person who grants approval for the loan, rejects the loan, or in some
cases, agrees to approve the loan if certain conditions are met?
underwriter
Which of the following statements is not true about a note?
a note must be tied to a mortgage to be legal
What percent of the REIT's assets must be made up of cash, real estate, mortgage
notes, or government securities?
75
Mary is getting a $120,000 loan at 6.5 percent and will pay 3 discount points. What
will the effective interest rate be?
.06875
How is the payoff of a construction loan normally accomplished?
with a takeout loan
TEXAS REAL ESTATE FINANCE PRACTICE EXAM
,2 | Page
Which type of property is most benefited by the income capitalization approach
to estimating value?
apartment building
Which statement is not true about the Farm Credit System?
FCS banks lend money from their deposits
In Texas, what is the maximum late payment penalty allowed?
no restrictions
With which kind of lease does the tenant not know the actual change in the rent
amount in advance?
indexed
What is the term used for an agreement between the borrower and a permanent
lender relative to future delivery of a takeout loan upon completion of
construction?
take-out commitment
Alex bought a property valued at $850,000 which has an annual net operating
income of $102,500. What is the capitalization rate?
.12
RESPA applies to which of these?
First mortgage on a single-family home
Which of the following would probably not be a use of a junior loan?
purchase of property through the VA
Who is responsible for ordering the preliminary title report?
escrow officer
What is the most important aspect of a credit report?
It shows the borrower's attitude about handling credit and debt.
Which of the following lease options would be the least favorable to the tenant?
tenant relocation
Which of the following is not a HUD responsibility?
FDIC
TEXAS REAL ESTATE FINANCE PRACTICE EXAM
,3 | Page
After analyzing the neighborhood, an appraiser will study all of the physical
aspects of the specific property being appraised except for which of the
following?
highway accessibility
Which of the following statements is FALSE?
non-institutional lenders are not subject to usury law.
What are the steps in the sales comparison approach to estimating value?
Choose appropriate comparable properties, adjust the comparables for the differences
and estimate the value.
What is the term used to describe a loan that is not government-backed?
conventional
Which of the following statements is FALSE about a life estate?
the most complete form of ownership
Why do lenders collect reserve funds at the property closing?
To be sure money will be available for tax and insurance payments
Which statement about syndication is FALSE?
Most investors belonging to syndicates invest a lot of their own money.
Bill bought a property for $270,000. The value of the building on the property is
$220,000. If the building has an economic life of 50 years, what is the depreciated
value of the building after 5 years?
198,000
What is a disadvantage of a graduated-payment loan?
This plan could result in negative amortization.
Sam Frank is a retired Army officer who wants to purchase a new home using a
VA loan. In 2000, Sam used his VA guarantee of $36,000 when he purchased his
current home. Based on the VA's maximum guarantee of $104,250 and his partial
eligibility, how much of a loan can Sam get with no money down?
273,000
Al purchases a factory as an investment. He installs sprinklers in the building.
What risk control technique is he practicing?
reducing
TEXAS REAL ESTATE FINANCE PRACTICE EXAM
, 4 | Page
What is the maximum annual amount a single taxpayer can give to a person
without incurring a gift tax liability?
15,000
Which of these statements is TRUE about financing large apartment complexes?
As the size of the building increases, the loan ratio is generally reduced.
The type of estate that has a definite beginning and ending date is known as
what?
estate for years
What is a leasehold mortgage called that is based mostly upon a well-known
tenant's financial strength?
credit loan
Fannie Mae and Freddie Mac are able to replenish their own funds by doing what?
Selling mortgage-backed securities
What does the term "mixed-use development" mean?
More than one use for a single building
The successful bidder at a judicial foreclosure sale receives which of these
documents?
Certificate of Sale
What is one of the primary purposes of the secondary mortgage market?
Cycle back money to primary lenders.
Before an option is exercised, which of these costs will the optionee incur?
Option fee
The entity holding title to a property during the term of a deed of trust is called
what?
trustee
the cost recovery period for land improvements is how long?
15 years
Jim Smith wants to purchase a vacation home and have it double as an
investment. What is the maximum amount of time per year that Jim and his family
can stay in the home and still be able to take the depreciation?
14 days
TEXAS REAL ESTATE FINANCE PRACTICE EXAM
TEXAS REAL ESTATE FINANCE
PRACTICE EXAM 200 REVISION
QUESTION WITH ANSWERS NEW
UPDATE 2025
Which of the following default types would be considered a technical default?
failure to keep property in good repair
Which Texas agency licenses, regulates, and examines the trust- and insurance-
funded prepaid funeral contract sellers?
TExas department of banking
The Tax Reform Act of 1986 established an entity that can issue multiclass
securities. What is this entity called?
REMIC
What is the main advantage of a single-family home investment over other real
estate investments?
liquidity
Who is the person who grants approval for the loan, rejects the loan, or in some
cases, agrees to approve the loan if certain conditions are met?
underwriter
Which of the following statements is not true about a note?
a note must be tied to a mortgage to be legal
What percent of the REIT's assets must be made up of cash, real estate, mortgage
notes, or government securities?
75
Mary is getting a $120,000 loan at 6.5 percent and will pay 3 discount points. What
will the effective interest rate be?
.06875
How is the payoff of a construction loan normally accomplished?
with a takeout loan
TEXAS REAL ESTATE FINANCE PRACTICE EXAM
,2 | Page
Which type of property is most benefited by the income capitalization approach
to estimating value?
apartment building
Which statement is not true about the Farm Credit System?
FCS banks lend money from their deposits
In Texas, what is the maximum late payment penalty allowed?
no restrictions
With which kind of lease does the tenant not know the actual change in the rent
amount in advance?
indexed
What is the term used for an agreement between the borrower and a permanent
lender relative to future delivery of a takeout loan upon completion of
construction?
take-out commitment
Alex bought a property valued at $850,000 which has an annual net operating
income of $102,500. What is the capitalization rate?
.12
RESPA applies to which of these?
First mortgage on a single-family home
Which of the following would probably not be a use of a junior loan?
purchase of property through the VA
Who is responsible for ordering the preliminary title report?
escrow officer
What is the most important aspect of a credit report?
It shows the borrower's attitude about handling credit and debt.
Which of the following lease options would be the least favorable to the tenant?
tenant relocation
Which of the following is not a HUD responsibility?
FDIC
TEXAS REAL ESTATE FINANCE PRACTICE EXAM
,3 | Page
After analyzing the neighborhood, an appraiser will study all of the physical
aspects of the specific property being appraised except for which of the
following?
highway accessibility
Which of the following statements is FALSE?
non-institutional lenders are not subject to usury law.
What are the steps in the sales comparison approach to estimating value?
Choose appropriate comparable properties, adjust the comparables for the differences
and estimate the value.
What is the term used to describe a loan that is not government-backed?
conventional
Which of the following statements is FALSE about a life estate?
the most complete form of ownership
Why do lenders collect reserve funds at the property closing?
To be sure money will be available for tax and insurance payments
Which statement about syndication is FALSE?
Most investors belonging to syndicates invest a lot of their own money.
Bill bought a property for $270,000. The value of the building on the property is
$220,000. If the building has an economic life of 50 years, what is the depreciated
value of the building after 5 years?
198,000
What is a disadvantage of a graduated-payment loan?
This plan could result in negative amortization.
Sam Frank is a retired Army officer who wants to purchase a new home using a
VA loan. In 2000, Sam used his VA guarantee of $36,000 when he purchased his
current home. Based on the VA's maximum guarantee of $104,250 and his partial
eligibility, how much of a loan can Sam get with no money down?
273,000
Al purchases a factory as an investment. He installs sprinklers in the building.
What risk control technique is he practicing?
reducing
TEXAS REAL ESTATE FINANCE PRACTICE EXAM
, 4 | Page
What is the maximum annual amount a single taxpayer can give to a person
without incurring a gift tax liability?
15,000
Which of these statements is TRUE about financing large apartment complexes?
As the size of the building increases, the loan ratio is generally reduced.
The type of estate that has a definite beginning and ending date is known as
what?
estate for years
What is a leasehold mortgage called that is based mostly upon a well-known
tenant's financial strength?
credit loan
Fannie Mae and Freddie Mac are able to replenish their own funds by doing what?
Selling mortgage-backed securities
What does the term "mixed-use development" mean?
More than one use for a single building
The successful bidder at a judicial foreclosure sale receives which of these
documents?
Certificate of Sale
What is one of the primary purposes of the secondary mortgage market?
Cycle back money to primary lenders.
Before an option is exercised, which of these costs will the optionee incur?
Option fee
The entity holding title to a property during the term of a deed of trust is called
what?
trustee
the cost recovery period for land improvements is how long?
15 years
Jim Smith wants to purchase a vacation home and have it double as an
investment. What is the maximum amount of time per year that Jim and his family
can stay in the home and still be able to take the depreciation?
14 days
TEXAS REAL ESTATE FINANCE PRACTICE EXAM
