TEXAS PRINCIPLES OF REAL ESTATE II TEST PAPER
2025/2026 QUESTIONS WITH ANSWERS GRADED A+
✔✔For recently sold properties, the licensee should also be concerned with what? -
✔✔Date of the sale
Financing Terms
Sale conditions
✔✔Commercial banks primarily do short term loans, such as: - ✔✔construction loans
manufactured housing loans
home improvement loans
✔✔Life insurance companies typically invest up to - ✔✔a third of their assets in real
estate loans
✔✔Lenders who make money available directly to borrowers and originate loans are
called what - ✔✔Primary mortgage market lenders
✔✔Balloon payment loans are - ✔✔partially amortized loans.
✔✔What is the major difference between pre-qualification and pre-approval? - ✔✔Pre-
qualification is an informal process in which a lender or an agent can do. Pre-approval is
a formal process that only a lender can do and it involves an actual loan application.
✔✔Index, adjustment period, interest rate caps, and margins are all key components to
what? - ✔✔Adjustable-rate mortgage (ARM)
✔✔A popular way to avoid paying private mortgage insurance (PMI) is - ✔✔through the
use of 80-10-10 financing
✔✔What are the two distinct features of fixed-rate, mortgage style loans? - ✔✔The
interest rate remains fixed for the life of the loan. The payments remain level for the life
of the loan and are structured to repay the loan at the end of the loan term.
✔✔A purchase money mortgage is - ✔✔a technique in which the buyer borrows from
the seller in addition to the lender
✔✔Homeowners can use a home equity loan for - ✔✔purchasing high dollar items.
taking a vacation. consolidating other loans or credit card debt. paying medical
expenses. paying college tuition. making home improvements
✔✔A package mortgage is - ✔✔one that includes all the personal property and
appliances that are installed on the property. This type of loan has been used
extensively in the sale of furnished condominiums
, ✔✔What type of loan is considered an expandable one? - ✔✔open-end
✔✔What does a buyer receive until the debt is fully paid in case of installment land
sales contract? - ✔✔equitable title
✔✔An approved VA appraiser must issue what type of document that shows the value
of the property to be equal to or greater than the sales price. - ✔✔Certificate of
Reasonable Value (CRV)
✔✔The Federal Housing Administration (FHA), Department of Veterans Affairs
(DVA/VA), and the Texas Veterans Land Board (VLB) all offer what type of loans? -
✔✔Government-backed loans
✔✔FHA and VA loans differ from conventional loans in what important way? - ✔✔FHA
and VA do not loan funds directly. FHA insures loans and VA guarantees loans, but the
loans themselves are made by approved, qualified lenders.
✔✔Why was Farmer Mac created? - ✔✔To establish a secondary market for
agricultural real estate and rural housing mortgage loans and to increase the availability
of long-term credit at steady interest rates to American farmers, ranchers and rural
homeowners.
✔✔Ginnie Mae, Fannie Mae and Freddie Mac assembles loans into a pool or
mortgages, then issues a security backed by these mortgages. This type of security is
called what? - ✔✔Participating certificate or guaranteed mortgage certificate
✔✔Community Reinvestment Act (CRA) - - ✔✔passed by Congress in 1977 to prevent
redlining and to encourage banks and thrifts to help meet the credit needs of all
segments of their communities
✔✔APR stands for - ✔✔annual percentage rate
✔✔Subprime Loans - ✔✔When lenders provide loans to unqualified home buyers
✔✔The major problem with a balloon payment loan - ✔✔the borrower has to come up
with a large sum of money at the end of the term
✔✔What transfers ownership interest in a property from one party to another? -
✔✔Conveyance
2025/2026 QUESTIONS WITH ANSWERS GRADED A+
✔✔For recently sold properties, the licensee should also be concerned with what? -
✔✔Date of the sale
Financing Terms
Sale conditions
✔✔Commercial banks primarily do short term loans, such as: - ✔✔construction loans
manufactured housing loans
home improvement loans
✔✔Life insurance companies typically invest up to - ✔✔a third of their assets in real
estate loans
✔✔Lenders who make money available directly to borrowers and originate loans are
called what - ✔✔Primary mortgage market lenders
✔✔Balloon payment loans are - ✔✔partially amortized loans.
✔✔What is the major difference between pre-qualification and pre-approval? - ✔✔Pre-
qualification is an informal process in which a lender or an agent can do. Pre-approval is
a formal process that only a lender can do and it involves an actual loan application.
✔✔Index, adjustment period, interest rate caps, and margins are all key components to
what? - ✔✔Adjustable-rate mortgage (ARM)
✔✔A popular way to avoid paying private mortgage insurance (PMI) is - ✔✔through the
use of 80-10-10 financing
✔✔What are the two distinct features of fixed-rate, mortgage style loans? - ✔✔The
interest rate remains fixed for the life of the loan. The payments remain level for the life
of the loan and are structured to repay the loan at the end of the loan term.
✔✔A purchase money mortgage is - ✔✔a technique in which the buyer borrows from
the seller in addition to the lender
✔✔Homeowners can use a home equity loan for - ✔✔purchasing high dollar items.
taking a vacation. consolidating other loans or credit card debt. paying medical
expenses. paying college tuition. making home improvements
✔✔A package mortgage is - ✔✔one that includes all the personal property and
appliances that are installed on the property. This type of loan has been used
extensively in the sale of furnished condominiums
, ✔✔What type of loan is considered an expandable one? - ✔✔open-end
✔✔What does a buyer receive until the debt is fully paid in case of installment land
sales contract? - ✔✔equitable title
✔✔An approved VA appraiser must issue what type of document that shows the value
of the property to be equal to or greater than the sales price. - ✔✔Certificate of
Reasonable Value (CRV)
✔✔The Federal Housing Administration (FHA), Department of Veterans Affairs
(DVA/VA), and the Texas Veterans Land Board (VLB) all offer what type of loans? -
✔✔Government-backed loans
✔✔FHA and VA loans differ from conventional loans in what important way? - ✔✔FHA
and VA do not loan funds directly. FHA insures loans and VA guarantees loans, but the
loans themselves are made by approved, qualified lenders.
✔✔Why was Farmer Mac created? - ✔✔To establish a secondary market for
agricultural real estate and rural housing mortgage loans and to increase the availability
of long-term credit at steady interest rates to American farmers, ranchers and rural
homeowners.
✔✔Ginnie Mae, Fannie Mae and Freddie Mac assembles loans into a pool or
mortgages, then issues a security backed by these mortgages. This type of security is
called what? - ✔✔Participating certificate or guaranteed mortgage certificate
✔✔Community Reinvestment Act (CRA) - - ✔✔passed by Congress in 1977 to prevent
redlining and to encourage banks and thrifts to help meet the credit needs of all
segments of their communities
✔✔APR stands for - ✔✔annual percentage rate
✔✔Subprime Loans - ✔✔When lenders provide loans to unqualified home buyers
✔✔The major problem with a balloon payment loan - ✔✔the borrower has to come up
with a large sum of money at the end of the term
✔✔What transfers ownership interest in a property from one party to another? -
✔✔Conveyance
