TEXAS PRINCIPLES OF REAL ESTATE II 2025/2026
QUESTIONS WITH ANSWERS GRADED A+
✔✔Preapproval differs from prequalification in that - ✔✔It involves the completion of an
actual loan application.
✔✔Most conventional loans require a borrower to make a down payment of: - ✔✔20%
or more
✔✔Which of these agencies is a private corporation that is not in conservatorship? -
✔✔farmer mac
✔✔During a loan interview, a lender always asks borrowers what church they attend.
What law, if any, does this action violate? - ✔✔equal credit opportunity act (ECOA)
✔✔Which statement about Ginnie Mae is false? - ✔✔Ginnie Mae is in conservatorship
with the Federal Housing Finance Agency (FHFA).
✔✔In an effort to make it possible for veterans returning from World War II to purchase
a home, the Veterans Administration offered the opportunity for veterans to purchase a
home with: - ✔✔no down payment
✔✔Borrowers who fall into the "below A" categories are referred to as - ✔✔sub-prime
borrowers
✔✔the truth in lending act exists - ✔✔so lenders disclose to buyers the true cost of
obtaining credit.
✔✔A mechanic's lien is an example of a - ✔✔cloud on the title
✔✔ - ✔✔
✔✔For purposes of the TRID rule, a business day is a - ✔✔day on which the creditor's
offices are open to the public for carrying out substantially all of its business functions.
✔✔The buyer has the right to review the completed settlement statement how long
before closing? - ✔✔at least three days
✔✔What does CFPB stand for? - ✔✔Consumer Financial Protection Bureau
✔✔RESPA gives the buyer the right to review the completed settlement statement how
long before closing? - ✔✔three business days
,✔✔When was RESPA created? - ✔✔1974
✔✔A mortgage Loan Estimate must be delivered within - ✔✔three business days of
loan application.
✔✔Which pages of the Closing Disclosure look the same, regardless of the loan type? -
✔✔pages 2 and 3
✔✔How many pages are there in the Loan Estimate? - ✔✔3
✔✔What ratio is calculated based on all of the monthly obligations the borrower has
outstanding? - ✔✔debt ratio
✔✔Which of the following procedures are used to compute the area of an irregular
parcel or room? - ✔✔The procedure used to compute the area of an irregular parcel or
room, is to divide the shape into regular rectangles, squares, or triangles; compute the
area for each figure; then add the areas together to get the total area for the parcel.
✔✔How many square feet in an acre? - ✔✔43,560
✔✔When closing on rental property, to do the monthly proration, rents are always paid
when? - ✔✔In advance
✔✔Points - ✔✔are items usually included in the cost of obtaining a new real estate
loan. Points are a one-time service charge to the borrower for making the loan
✔✔there are 2 types of points - ✔✔origination points and discount points
✔✔Origination points - ✔✔Lenders charge origination points to recover some costs of
the loan origination process. In many cases, a loan officer's compensation is based on
the origination points.
✔✔Discount points - ✔✔charges are designed to offset any losses the lender might
suffer when selling the loan to the secondary mortgage market. Discount points are a
means of raising the effective interest rate of the loan.
✔✔loan-to-value ratio - ✔✔(LTV) expresses the relationship between a property's
purchase price and its loan amount. The higher the LTV ratio, the greater the loan in
relation to the purchase price, and the lesser the borrower's equity in the property and
vice versa
✔✔Area - ✔✔is always expressed in square feet or square yards
, ✔✔Some expenses paid at closing must be __________ or divided proportionately
between the buyer and the seller. - ✔✔prorated
✔✔Some expenses paid at closing must be prorated or divided proportionately between
the buyer and the seller. The most common items that fall into this category include: -
✔✔Taxes
Insurance
Mortgage interest
Utilities
✔✔Closing agents and lenders typically use one of two methods when calculating items
that need to be prorated: - ✔✔the 12- month/360 day method (statutory year) and the
365 actual day method (calendar year).
✔✔If a closing involves an income property, it will be common to - ✔✔prorate the rent
for the month of the closing if the tenants pay by the month.
✔✔Profit - ✔✔The result of selling something for more than what it cost you to purchase
it
✔✔Loss - ✔✔The result of selling something for less than what it cost you to purchase
it.
✔✔Profit margin - ✔✔The percentage of the selling price that turns into profit.
✔✔Interest - ✔✔For a buyer it is the amount paid in return for the use of money. For a
lender it is the money earned or received from a loan investment.
✔✔Simple interest - ✔✔Money that is paid only for the amount of principal the borrower
still owes.
✔✔Add-on interest - ✔✔Interest calculated as a percentage of the original loan
(principal) rather than on the balance due before each payment.
✔✔Compound interest - ✔✔Interest computed on the principal amount plus accrued
interest.
✔✔Income ratio. - ✔✔Ratio of monthly mortgage payment as portion of monthly
income. Establishes the borrower's capacity to pay the loan by limiting the percent of
gross income they spend on housing costs.
✔✔Debt to income ratio - ✔✔Ratio of the monthly debt payments as a portion of
monthly income. Used to determine the borrower's capacity to repay the money they
borrow.
QUESTIONS WITH ANSWERS GRADED A+
✔✔Preapproval differs from prequalification in that - ✔✔It involves the completion of an
actual loan application.
✔✔Most conventional loans require a borrower to make a down payment of: - ✔✔20%
or more
✔✔Which of these agencies is a private corporation that is not in conservatorship? -
✔✔farmer mac
✔✔During a loan interview, a lender always asks borrowers what church they attend.
What law, if any, does this action violate? - ✔✔equal credit opportunity act (ECOA)
✔✔Which statement about Ginnie Mae is false? - ✔✔Ginnie Mae is in conservatorship
with the Federal Housing Finance Agency (FHFA).
✔✔In an effort to make it possible for veterans returning from World War II to purchase
a home, the Veterans Administration offered the opportunity for veterans to purchase a
home with: - ✔✔no down payment
✔✔Borrowers who fall into the "below A" categories are referred to as - ✔✔sub-prime
borrowers
✔✔the truth in lending act exists - ✔✔so lenders disclose to buyers the true cost of
obtaining credit.
✔✔A mechanic's lien is an example of a - ✔✔cloud on the title
✔✔ - ✔✔
✔✔For purposes of the TRID rule, a business day is a - ✔✔day on which the creditor's
offices are open to the public for carrying out substantially all of its business functions.
✔✔The buyer has the right to review the completed settlement statement how long
before closing? - ✔✔at least three days
✔✔What does CFPB stand for? - ✔✔Consumer Financial Protection Bureau
✔✔RESPA gives the buyer the right to review the completed settlement statement how
long before closing? - ✔✔three business days
,✔✔When was RESPA created? - ✔✔1974
✔✔A mortgage Loan Estimate must be delivered within - ✔✔three business days of
loan application.
✔✔Which pages of the Closing Disclosure look the same, regardless of the loan type? -
✔✔pages 2 and 3
✔✔How many pages are there in the Loan Estimate? - ✔✔3
✔✔What ratio is calculated based on all of the monthly obligations the borrower has
outstanding? - ✔✔debt ratio
✔✔Which of the following procedures are used to compute the area of an irregular
parcel or room? - ✔✔The procedure used to compute the area of an irregular parcel or
room, is to divide the shape into regular rectangles, squares, or triangles; compute the
area for each figure; then add the areas together to get the total area for the parcel.
✔✔How many square feet in an acre? - ✔✔43,560
✔✔When closing on rental property, to do the monthly proration, rents are always paid
when? - ✔✔In advance
✔✔Points - ✔✔are items usually included in the cost of obtaining a new real estate
loan. Points are a one-time service charge to the borrower for making the loan
✔✔there are 2 types of points - ✔✔origination points and discount points
✔✔Origination points - ✔✔Lenders charge origination points to recover some costs of
the loan origination process. In many cases, a loan officer's compensation is based on
the origination points.
✔✔Discount points - ✔✔charges are designed to offset any losses the lender might
suffer when selling the loan to the secondary mortgage market. Discount points are a
means of raising the effective interest rate of the loan.
✔✔loan-to-value ratio - ✔✔(LTV) expresses the relationship between a property's
purchase price and its loan amount. The higher the LTV ratio, the greater the loan in
relation to the purchase price, and the lesser the borrower's equity in the property and
vice versa
✔✔Area - ✔✔is always expressed in square feet or square yards
, ✔✔Some expenses paid at closing must be __________ or divided proportionately
between the buyer and the seller. - ✔✔prorated
✔✔Some expenses paid at closing must be prorated or divided proportionately between
the buyer and the seller. The most common items that fall into this category include: -
✔✔Taxes
Insurance
Mortgage interest
Utilities
✔✔Closing agents and lenders typically use one of two methods when calculating items
that need to be prorated: - ✔✔the 12- month/360 day method (statutory year) and the
365 actual day method (calendar year).
✔✔If a closing involves an income property, it will be common to - ✔✔prorate the rent
for the month of the closing if the tenants pay by the month.
✔✔Profit - ✔✔The result of selling something for more than what it cost you to purchase
it
✔✔Loss - ✔✔The result of selling something for less than what it cost you to purchase
it.
✔✔Profit margin - ✔✔The percentage of the selling price that turns into profit.
✔✔Interest - ✔✔For a buyer it is the amount paid in return for the use of money. For a
lender it is the money earned or received from a loan investment.
✔✔Simple interest - ✔✔Money that is paid only for the amount of principal the borrower
still owes.
✔✔Add-on interest - ✔✔Interest calculated as a percentage of the original loan
(principal) rather than on the balance due before each payment.
✔✔Compound interest - ✔✔Interest computed on the principal amount plus accrued
interest.
✔✔Income ratio. - ✔✔Ratio of monthly mortgage payment as portion of monthly
income. Establishes the borrower's capacity to pay the loan by limiting the percent of
gross income they spend on housing costs.
✔✔Debt to income ratio - ✔✔Ratio of the monthly debt payments as a portion of
monthly income. Used to determine the borrower's capacity to repay the money they
borrow.
