Real Estate Financing Solved Exam
Questions and Answers (Complete
Practice Papers)
Financing - Correct Answers ✅real estate is purchased with
our paying cash
Mortgage - Correct Answers ✅A loan to purchase real
estate and Voluntary Lien
Deed of Trust - Correct Answers ✅title is held in trust by a
third person until the debt is paid.
Land Contract ( Contract for Deed): - Correct Answers
✅Method of seller financing in which the buyer receives
equitable title upon closing and the seller retains legal title
until the buyer completes all installment payment.
Financial Institution - Correct Answers ✅a financial
institution is an institution that provides financial services for
its clients or members.
common financial institutions includes: Commercial banks,
Saving and loans, insurance companies and credit unions.
Federal Reserve System - Correct Answers ✅Central
banking system run by the federal gov that regulates banks
in the US, ( Discount rate, reserve requirements; buying and
selling gov securities, which provide cash to lenders for
additional loan)
,Real Estate Financing Solved Exam
Questions and Answers (Complete
Practice Papers)
Primary Mortgage Market - Correct Answers ✅Network of
direct lenders, also know as prime lenders or originators. who
make mortgage loans directly to borrowers.
Secondary Mortgage Market - Correct Answers ✅Market
sale of institutions that purchase and sell existing mortgages.
Collateral - Correct Answers ✅Money or property pledged
to a lender by a borrower as security for the payment of debt.
Should the buyer fail to pay the loan the lender may recoup
the loss by exercising its right to force the sale of the pledged
collateral ( the property)
Loan-to-Value Ratio ( LTV)
LTV=Loan Amount/property Value
House cost X percentage= down payment
$80,000 X 0.25 (25%)= 20,000 - Correct Answers ✅Ratio
between a mortgage loan amount and the sales price of
financed property or appraised value of real estate,
-the higher the LTV, the less money down the purchaser pays
-the lower the LTV, the higher the downpayment for the
purchaser price.
, Real Estate Financing Solved Exam
Questions and Answers (Complete
Practice Papers)
Interest - Correct Answers ✅cost of borrowing money. A
lender charges a borrower a fee based on certain percentage
of the unpaid loan balance for the use of borrowed money.
Principal - Correct Answers ✅the total amount of borrowed
money
Annual percentage Rate ( APR) - Correct Answers ✅the
cost of credit expressed as a yearly percentage rate. APR of
mortgage includes the interest rate, points, mortgage broker
fees and certain other credit charges.
Usury - Correct Answers ✅act of charging an interest rate
in excess of what the law permits.
Discount Points
1 Point= 1% - Correct Answers ✅addition fee charged to
borrower by the lender, they are paid in lump sum at the time
is closing.
Reserve Account: - Correct Answers ✅financial account
used by lenders to hold, or reserve a borrowers' money for
future payment of items such as real estate taxes, hazard
insurance, and deferred maintenance.
Questions and Answers (Complete
Practice Papers)
Financing - Correct Answers ✅real estate is purchased with
our paying cash
Mortgage - Correct Answers ✅A loan to purchase real
estate and Voluntary Lien
Deed of Trust - Correct Answers ✅title is held in trust by a
third person until the debt is paid.
Land Contract ( Contract for Deed): - Correct Answers
✅Method of seller financing in which the buyer receives
equitable title upon closing and the seller retains legal title
until the buyer completes all installment payment.
Financial Institution - Correct Answers ✅a financial
institution is an institution that provides financial services for
its clients or members.
common financial institutions includes: Commercial banks,
Saving and loans, insurance companies and credit unions.
Federal Reserve System - Correct Answers ✅Central
banking system run by the federal gov that regulates banks
in the US, ( Discount rate, reserve requirements; buying and
selling gov securities, which provide cash to lenders for
additional loan)
,Real Estate Financing Solved Exam
Questions and Answers (Complete
Practice Papers)
Primary Mortgage Market - Correct Answers ✅Network of
direct lenders, also know as prime lenders or originators. who
make mortgage loans directly to borrowers.
Secondary Mortgage Market - Correct Answers ✅Market
sale of institutions that purchase and sell existing mortgages.
Collateral - Correct Answers ✅Money or property pledged
to a lender by a borrower as security for the payment of debt.
Should the buyer fail to pay the loan the lender may recoup
the loss by exercising its right to force the sale of the pledged
collateral ( the property)
Loan-to-Value Ratio ( LTV)
LTV=Loan Amount/property Value
House cost X percentage= down payment
$80,000 X 0.25 (25%)= 20,000 - Correct Answers ✅Ratio
between a mortgage loan amount and the sales price of
financed property or appraised value of real estate,
-the higher the LTV, the less money down the purchaser pays
-the lower the LTV, the higher the downpayment for the
purchaser price.
, Real Estate Financing Solved Exam
Questions and Answers (Complete
Practice Papers)
Interest - Correct Answers ✅cost of borrowing money. A
lender charges a borrower a fee based on certain percentage
of the unpaid loan balance for the use of borrowed money.
Principal - Correct Answers ✅the total amount of borrowed
money
Annual percentage Rate ( APR) - Correct Answers ✅the
cost of credit expressed as a yearly percentage rate. APR of
mortgage includes the interest rate, points, mortgage broker
fees and certain other credit charges.
Usury - Correct Answers ✅act of charging an interest rate
in excess of what the law permits.
Discount Points
1 Point= 1% - Correct Answers ✅addition fee charged to
borrower by the lender, they are paid in lump sum at the time
is closing.
Reserve Account: - Correct Answers ✅financial account
used by lenders to hold, or reserve a borrowers' money for
future payment of items such as real estate taxes, hazard
insurance, and deferred maintenance.
