ILLINOIS REAL ESTATE BROKER PSI
EXAMINATION TEST 2026 QUESTIONS WITH
CORRECT ANSWERS
◉adjustable-rate mortgage (ARM) . Answer: A mortgage in which the
interest changes periodically, according to corresponding fluctuations in
an index. All ARMs are tied to indexes.
◉adjustment date . Answer: The date the interest rate changes on an
adjustable-rate mortgage
◉Amortization . Answer: The loan payment consists of a portion which
will be applied to pay the accruing interest on a loan, with the remainder
being applied to the principal. Over time, the interest portion decreases
as the loan balance decreases, and the amount applied to principal
increases so that the loan is paid off (amortized) in the specified time.
◉amortization schedule . Answer: A table which shows how much of
each payment will be applied toward principal and how much toward
interest over the life of the loan. It also shows the gradual decrease of the
loan balance until it reaches zero.
,◉annual percentage rate (APR) . Answer: This is not the note rate on
your loan. It is a value created according to a government formula
intended to reflect the true annual cost of borrowing, expressed as a
percentage. It works sort of like this, but not exactly, so only use this as
a guideline: deduct the closing costs from your loan amount, then using
your actual loan payment, calculate what the interest rate would be on
this amount instead of your actual loan amount. You will come up with a
number close to the APR. Because you are using the same payment on a
smaller amount, the APR is always higher than the actual not rate on
your loan.
◉application . Answer: The form used to apply for a mortgage loan,
containing information about a borrower's income, savings, assets, debts,
and more.
◉appraisal . Answer: An estimate of the current value of the property.
◉appraised value . Answer: opinion of a property's fair market value,
based on an appraiser's knowledge, experience, and analysis of the
property. Since an appraisal is based primarily on comparable sales, and
the most recent sale is the one on the property in question, the appraisal
usually comes out at the purchase price.
◉appraiser . Answer: An individual qualified by education, training, and
experience to estimate the value of real property and personal property.
Although some appraisers work
,◉appreciation . Answer: increase in the value of a property due to
changes in market conditions, inflation, or other causes.
◉assessed value . Answer: The valuation placed on property by a public
tax assessor for purposes of taxation
◉assessment . Answer: The placing of a value on property for the
purpose of taxation.
◉assessor . Answer: public official who establishes the value of a
property for taxation purposes.
◉asset . Answer: Items of value owned by an individual. Assets that can
be quickly converted into cash are considered "liquid assets." These
include bank accounts, stocks, bonds, mutual funds, and so on. Other
assets include real estate, personal property
◉Assignment . Answer: The act of transferring to another all or part of
one's rights arising under a contract.
◉assumable mortgage . Answer: mortgage that can be assumed by the
buyer when a home is sold. Usually, the borrower must "qualify" in
order to assume the loan.
, ◉assumption . Answer: The term applied when a buyer assumes the
seller's mortgage.
◉balloon mortgage . Answer: A mortgage loan that requires the
remaining principal balance be paid at a specific point in time. For
example, a loan may be amortized as if it would be paid over a thirty
year period, but requires that at the end of the tenth year the entire
remaining balance must be paid.
◉balloon payment . Answer: The final lump sum payment that is due at
the termination of a balloon mortgage
◉bankruptcy . Answer: By filing in federal bankruptcy court, an
individual or individuals can restructure or relieve themselves of debts
and liabilities. Bankruptcies are of various types, but the most common
for an individual seem to be a "Chapter 7 No Asset" bankruptcy which
relieves the borrower of most types of debts. A borrower cannot usually
qualify for an "A" paper loan for a period of two years after the
bankruptcy has been discharged and requires the re-establishment of an
ability to repay debt.
◉Bill of sale . Answer: A written document that transfers title to
personal property. For example, when selling an automobile to acquire
funds which will be used as a source of down payment or for closing
costs, the lender will usually require the bill of sale (in addition to other
items) to help document this source of funds.
EXAMINATION TEST 2026 QUESTIONS WITH
CORRECT ANSWERS
◉adjustable-rate mortgage (ARM) . Answer: A mortgage in which the
interest changes periodically, according to corresponding fluctuations in
an index. All ARMs are tied to indexes.
◉adjustment date . Answer: The date the interest rate changes on an
adjustable-rate mortgage
◉Amortization . Answer: The loan payment consists of a portion which
will be applied to pay the accruing interest on a loan, with the remainder
being applied to the principal. Over time, the interest portion decreases
as the loan balance decreases, and the amount applied to principal
increases so that the loan is paid off (amortized) in the specified time.
◉amortization schedule . Answer: A table which shows how much of
each payment will be applied toward principal and how much toward
interest over the life of the loan. It also shows the gradual decrease of the
loan balance until it reaches zero.
,◉annual percentage rate (APR) . Answer: This is not the note rate on
your loan. It is a value created according to a government formula
intended to reflect the true annual cost of borrowing, expressed as a
percentage. It works sort of like this, but not exactly, so only use this as
a guideline: deduct the closing costs from your loan amount, then using
your actual loan payment, calculate what the interest rate would be on
this amount instead of your actual loan amount. You will come up with a
number close to the APR. Because you are using the same payment on a
smaller amount, the APR is always higher than the actual not rate on
your loan.
◉application . Answer: The form used to apply for a mortgage loan,
containing information about a borrower's income, savings, assets, debts,
and more.
◉appraisal . Answer: An estimate of the current value of the property.
◉appraised value . Answer: opinion of a property's fair market value,
based on an appraiser's knowledge, experience, and analysis of the
property. Since an appraisal is based primarily on comparable sales, and
the most recent sale is the one on the property in question, the appraisal
usually comes out at the purchase price.
◉appraiser . Answer: An individual qualified by education, training, and
experience to estimate the value of real property and personal property.
Although some appraisers work
,◉appreciation . Answer: increase in the value of a property due to
changes in market conditions, inflation, or other causes.
◉assessed value . Answer: The valuation placed on property by a public
tax assessor for purposes of taxation
◉assessment . Answer: The placing of a value on property for the
purpose of taxation.
◉assessor . Answer: public official who establishes the value of a
property for taxation purposes.
◉asset . Answer: Items of value owned by an individual. Assets that can
be quickly converted into cash are considered "liquid assets." These
include bank accounts, stocks, bonds, mutual funds, and so on. Other
assets include real estate, personal property
◉Assignment . Answer: The act of transferring to another all or part of
one's rights arising under a contract.
◉assumable mortgage . Answer: mortgage that can be assumed by the
buyer when a home is sold. Usually, the borrower must "qualify" in
order to assume the loan.
, ◉assumption . Answer: The term applied when a buyer assumes the
seller's mortgage.
◉balloon mortgage . Answer: A mortgage loan that requires the
remaining principal balance be paid at a specific point in time. For
example, a loan may be amortized as if it would be paid over a thirty
year period, but requires that at the end of the tenth year the entire
remaining balance must be paid.
◉balloon payment . Answer: The final lump sum payment that is due at
the termination of a balloon mortgage
◉bankruptcy . Answer: By filing in federal bankruptcy court, an
individual or individuals can restructure or relieve themselves of debts
and liabilities. Bankruptcies are of various types, but the most common
for an individual seem to be a "Chapter 7 No Asset" bankruptcy which
relieves the borrower of most types of debts. A borrower cannot usually
qualify for an "A" paper loan for a period of two years after the
bankruptcy has been discharged and requires the re-establishment of an
ability to repay debt.
◉Bill of sale . Answer: A written document that transfers title to
personal property. For example, when selling an automobile to acquire
funds which will be used as a source of down payment or for closing
costs, the lender will usually require the bill of sale (in addition to other
items) to help document this source of funds.
