Texas Pre-License - Real Estate Finance Prac ce Exam
Ques ons/ texas real estate prac ce exam With
complete solu on Newest RATED A+
What is a mortgage banker? - Ans The correct answer is that a mortgage banker is an en ty or
person who originates and services mortgage loans using their own funds. They usually provide
financing on behalf of large investors.
Eloise's loan is neither insured by the government nor guaranteed by the government. Which
of these BEST describes the kind of loan she has? - Ans Conven onal loans are neither
guaranteed nor insured by the government. Conforming loans CAN be conven onal loans, but
they must meet other criteria as well.
For a loan to fall under RESPA, it has to be what is called a(n): - Ans federally related mortgage
loan
Why would a lender want to sell their loans on the secondary mortgage market? - Ans Selling
their loans allows them to get money faster.
Under what condi ons could a lender seek a deficiency judgment? - Ans If a borrower defaults,
and the sale of the foreclosed home doesn't cover the loan and expenses of foreclosure, the
lender can seek a deficiency judgment.
What does this formula solve for: (PITI + Long-term liabili es) ÷ Gross monthly income? - Ans
total debt service ra o
Which of the following ins tu ons has 11 districts and the purpose to support residen al
mortgage lending and related community investment? - Ans Federal Home Loan Bank System
, What is a back-end ra o? - Ans a person's total monthly expenses divided by their monthly
income.
Which of these statements most accurately describes the 203(b) FHA loan? - Ans It is the most
popular kind of FHA loan.
Which of these ac ons would cons tute actual no ce? - Ans No, recording a deed creates
construc ve no ce. The answer is that Chris ne looking up a deed creates actual no ce.
How does the VA pay for its loan guarantee program? - Ans by charging a funding fee
Which of the following is one of the federal government's monetary powers? - Ans lowering
the interest rate for member banks by a half percentage point is an example of the federal
government's monetary powers.
Ramsey is considering an ARM with an ini al rate of 5.13%. The margin is 2%, and the ini al
index rate is 3.13% The ini al rate will adjust every four years. The life me cap is 3%. What is
the highest rate Ramsey could pay? - Ans 5.13% plus the life me cap of 3% is 8.13%.
Termite infesta ons, mold problems, a falling-in roof, lead-based paint, asbestos, and flood
damage are all a@ributes of what kind of property, according to lender classifica ons? - Ans a
physically distressed property
What happens to a borrower's PMI when the equity in their property reaches 22%? - Ans the
PMI is automa cally removed. The borrower doesn't have to be found credit-worthy.
What is the main difference between credit unions and banks? - Ans Credit unions require
customers to be members, tend to put community before profits, but offer the same services as
banks.
,What is another name for the process of compound interest causing a loan debt to increase,
despite a borrower making payments? - Ans Nega ve amor za on
Stabilized condi ons, home foreclosures, and low government interest rates are a sign of which
phase of the real estate cycle? - Ans recovery
What are buyer rebates? - Ans the illegal prac ce of a buyer receiving money at closing
without their lender's knowledge. Note that what makes it illegal is that it's being concealed
from the lender that the buyer is geDng this money.
Ansel took out an 80-10-10 piggyback loan. The purchase price of the property was $275,000.
How much did he put down? - Ans No, the answer is $27,500. Remember that an 80-10-10
piggyback loan means Ansel is financing 80% of the purchase price with one loan (that likely has
a lower interest rate), 10% of the property with a second loan (that likely has a higher interest
rate), and puDng 10% down. To find 10% of $275,000, we mul ply it by 0.1: $275,000 x 0.1 =
$27,500. You, instead, found 80% of $275,000.
Which of these ac ons would a mortgage's due-on-sale clause prevent? - Ans A due-on-sale
clause prevents a buyer from assuming the mortgage of the seller.
Which of these ac ons could cause a loan to default? - Ans not paying taxes
Which of the following would increase the amount the buyer pays at closing? - Ans a debit to
the buyer
Your client, Jonathan, wants to sell his house. The property has an encumbrance on it. What
should you tell Jonathan? - Ans It's possible to sell the property as is, but if he can't clear the
encumbrance, the home may be harder to market.
What are the two primary categories of foreclosure? - Ans judicial and nonjudicial
, What is a blanket mortgage? - Ans blanket mortgages use more than one piece of collateral.
What is one advantage of geDng an FHA loan? - Ans No, the minimum down payment with an
FHA loan is 3.5% down. The answer is that FHA loans are easier to qualify for than other loans.
This is a huge advantage for borrowers with lower down payments or other challenges.
What is it called when a lender allows a borrower in financial difficulty to not make principal
and/or interest payments for a period of me? - Ans When a lender allows a borrower in
financial difficulty to not make principal and/or interest payments for a period of me, it is
called a moratorium.
Which of these forms is a tle company representa ve or real estate a@orney required to
prepare? - Ans closing disclosure
What is a dollar-by-dollar reduc on in the appraisal value of a property? - Ans tax exemp on
Without a secondary mortgage market, mortgages would be considered: - Ans Without a
secondary mortgage market, mortgages would be considered illiquid. Congress created a
secondary market where mortgages could be bought and sold. This is known as mortgage
liquidity (the rela ve difficulty of conver ng an asset to cash without loss of value).
What is a statutory redemp on period? - Ans period of me aLer the sale of a foreclosed
property during which the foreclosed party may s ll recover the property.
What is the difference between a 203(b) FHA loan and a 203(k) FHA loan? - Ans FHA 203(b)
loans are for buying a home, whereas 203(k) loans include money for renova ons.
Which of these loan types is paid in installments called "draws"? - Ans construc on mortgage
Ques ons/ texas real estate prac ce exam With
complete solu on Newest RATED A+
What is a mortgage banker? - Ans The correct answer is that a mortgage banker is an en ty or
person who originates and services mortgage loans using their own funds. They usually provide
financing on behalf of large investors.
Eloise's loan is neither insured by the government nor guaranteed by the government. Which
of these BEST describes the kind of loan she has? - Ans Conven onal loans are neither
guaranteed nor insured by the government. Conforming loans CAN be conven onal loans, but
they must meet other criteria as well.
For a loan to fall under RESPA, it has to be what is called a(n): - Ans federally related mortgage
loan
Why would a lender want to sell their loans on the secondary mortgage market? - Ans Selling
their loans allows them to get money faster.
Under what condi ons could a lender seek a deficiency judgment? - Ans If a borrower defaults,
and the sale of the foreclosed home doesn't cover the loan and expenses of foreclosure, the
lender can seek a deficiency judgment.
What does this formula solve for: (PITI + Long-term liabili es) ÷ Gross monthly income? - Ans
total debt service ra o
Which of the following ins tu ons has 11 districts and the purpose to support residen al
mortgage lending and related community investment? - Ans Federal Home Loan Bank System
, What is a back-end ra o? - Ans a person's total monthly expenses divided by their monthly
income.
Which of these statements most accurately describes the 203(b) FHA loan? - Ans It is the most
popular kind of FHA loan.
Which of these ac ons would cons tute actual no ce? - Ans No, recording a deed creates
construc ve no ce. The answer is that Chris ne looking up a deed creates actual no ce.
How does the VA pay for its loan guarantee program? - Ans by charging a funding fee
Which of the following is one of the federal government's monetary powers? - Ans lowering
the interest rate for member banks by a half percentage point is an example of the federal
government's monetary powers.
Ramsey is considering an ARM with an ini al rate of 5.13%. The margin is 2%, and the ini al
index rate is 3.13% The ini al rate will adjust every four years. The life me cap is 3%. What is
the highest rate Ramsey could pay? - Ans 5.13% plus the life me cap of 3% is 8.13%.
Termite infesta ons, mold problems, a falling-in roof, lead-based paint, asbestos, and flood
damage are all a@ributes of what kind of property, according to lender classifica ons? - Ans a
physically distressed property
What happens to a borrower's PMI when the equity in their property reaches 22%? - Ans the
PMI is automa cally removed. The borrower doesn't have to be found credit-worthy.
What is the main difference between credit unions and banks? - Ans Credit unions require
customers to be members, tend to put community before profits, but offer the same services as
banks.
,What is another name for the process of compound interest causing a loan debt to increase,
despite a borrower making payments? - Ans Nega ve amor za on
Stabilized condi ons, home foreclosures, and low government interest rates are a sign of which
phase of the real estate cycle? - Ans recovery
What are buyer rebates? - Ans the illegal prac ce of a buyer receiving money at closing
without their lender's knowledge. Note that what makes it illegal is that it's being concealed
from the lender that the buyer is geDng this money.
Ansel took out an 80-10-10 piggyback loan. The purchase price of the property was $275,000.
How much did he put down? - Ans No, the answer is $27,500. Remember that an 80-10-10
piggyback loan means Ansel is financing 80% of the purchase price with one loan (that likely has
a lower interest rate), 10% of the property with a second loan (that likely has a higher interest
rate), and puDng 10% down. To find 10% of $275,000, we mul ply it by 0.1: $275,000 x 0.1 =
$27,500. You, instead, found 80% of $275,000.
Which of these ac ons would a mortgage's due-on-sale clause prevent? - Ans A due-on-sale
clause prevents a buyer from assuming the mortgage of the seller.
Which of these ac ons could cause a loan to default? - Ans not paying taxes
Which of the following would increase the amount the buyer pays at closing? - Ans a debit to
the buyer
Your client, Jonathan, wants to sell his house. The property has an encumbrance on it. What
should you tell Jonathan? - Ans It's possible to sell the property as is, but if he can't clear the
encumbrance, the home may be harder to market.
What are the two primary categories of foreclosure? - Ans judicial and nonjudicial
, What is a blanket mortgage? - Ans blanket mortgages use more than one piece of collateral.
What is one advantage of geDng an FHA loan? - Ans No, the minimum down payment with an
FHA loan is 3.5% down. The answer is that FHA loans are easier to qualify for than other loans.
This is a huge advantage for borrowers with lower down payments or other challenges.
What is it called when a lender allows a borrower in financial difficulty to not make principal
and/or interest payments for a period of me? - Ans When a lender allows a borrower in
financial difficulty to not make principal and/or interest payments for a period of me, it is
called a moratorium.
Which of these forms is a tle company representa ve or real estate a@orney required to
prepare? - Ans closing disclosure
What is a dollar-by-dollar reduc on in the appraisal value of a property? - Ans tax exemp on
Without a secondary mortgage market, mortgages would be considered: - Ans Without a
secondary mortgage market, mortgages would be considered illiquid. Congress created a
secondary market where mortgages could be bought and sold. This is known as mortgage
liquidity (the rela ve difficulty of conver ng an asset to cash without loss of value).
What is a statutory redemp on period? - Ans period of me aLer the sale of a foreclosed
property during which the foreclosed party may s ll recover the property.
What is the difference between a 203(b) FHA loan and a 203(k) FHA loan? - Ans FHA 203(b)
loans are for buying a home, whereas 203(k) loans include money for renova ons.
Which of these loan types is paid in installments called "draws"? - Ans construc on mortgage
