IAAO 102 FINAL PAPER 2026 QUESTIONS AND
ANSWERS VERIFIED
◉ A _________________ mortgage is also called a second mortgage.
Answer: junior
◉ The four types of mortgages classified according to repayment
provisions.. Answer: Variable or Adjustable Rate Mortgage, Straight
Mortgage, Partially Amortized Mortgage, Reverse Mortgage
◉ A payment on the balance due of a note at the end of the loan term
that is in excess of the regular payment amounts is called a
_____________________.. Answer: balloon payment.
◉ What is the difference between straight mortgages and partially
amortized mortgages?. Answer: Straight mortgages initially involve
interest-only payments, while partially amortized mortgages include
both principal and interest in the regular payments but may have a
balloon payment at the end.
◉ A _________________ mortgage covers real estate as well as personal
property included in real estate.. Answer: Package Mortgage
,◉ The four variables in real estate financing that affect the mortgage
payment are?. Answer: Amount Borrowed, Interest Rate, Term of
Loan, Frequency of Payments
◉ The ________________ _______________________ rate or discount rate
reflect the return on the investment.. Answer: overall yield
◉ The summation concept is a theoretical procedure in developing
the discount rate for a real estate investment and is comprised of the
following four parts:. Answer: Safe Rates, Risk Rate, Rate for Non
Liquidity, Rate for Management
◉ The ________________ __________________ rate reflects the relationship
between the real estate taxes and the value of the property.. Answer:
effective tax
◉ To obtain value using the IRV formula, one must _____________ the
income by the rate.. Answer: divide
◉ To obtain value using the VIF formula, one must ______________ the
income by the factor.. Answer: multiply
◉ Return of Investment. Answer: Recapture Rate (Getting Back the
amount invested)
,◉ Investors are averse to risk. A savings account insured by the
government is relatively free of risk. Real estate may be a risky
investment due to a variety of factors affecting its economic
environment.. Answer: Safety
◉ A savings account is accessible on demand for conversion to cash.
Real estate investment requires time to convert to cash because it
needs time to secure a contract and sell. This may take week or even
months before the title and the seller is paid.. Answer: LIQUIDITY
◉ A savings account can be opened with very small amount of
money, real estate generally requires a substantial commitment of
capital.. Answer: Size
◉ The entire investment in a savings account can be used as
collateral for a loan. However, lending institutions generally will only
allow a percentage of the real estates market value to be used as
collateral.. Answer: COLLATERAL
◉ A savings account can be opened and closed in very short period.
Real estate generally requires a longer term commitment of funds
but can be shorter for value added investments. A value added
investment involves buying a property, improving it in some way,
and sell it at an opportune time for gain.. Answer: Time
, ◉ A savings account requires very little management decision
making by the owner. A real estate investment on the other hand
requires substantial investment management decision making on
the part of the owner.. Answer: Management
◉ Savings accounts often lose purchasing power as a result of
inflation. Typically real estate tends to appreciate over time and can
be used as hedge againts inflation.. Answer: Appreciation
◉ There no income tax advantages for for savings accounts. All
interest is taxed directly. Real property may offer the opportunity to
reduce, defer, or eliminate income taxes.. Answer: Income Tax
Advantages.
◉ The borrowing of funds in hopes of earnings greater return than
the cost of the borrowed funds. Investors cannot borrow money at a
rate which would allow successful investment in a savings account.
Investors in real estate often can borrow money at a lower rate that
the yield rate on the real estate investment.. Answer: LEVERAGE
◉ The purchase of real estate is often financed entirely by thee
purchaser without fund provided by another party. A significant
amount of commercial real estate is financed entirely by this..
Answer: cash
ANSWERS VERIFIED
◉ A _________________ mortgage is also called a second mortgage.
Answer: junior
◉ The four types of mortgages classified according to repayment
provisions.. Answer: Variable or Adjustable Rate Mortgage, Straight
Mortgage, Partially Amortized Mortgage, Reverse Mortgage
◉ A payment on the balance due of a note at the end of the loan term
that is in excess of the regular payment amounts is called a
_____________________.. Answer: balloon payment.
◉ What is the difference between straight mortgages and partially
amortized mortgages?. Answer: Straight mortgages initially involve
interest-only payments, while partially amortized mortgages include
both principal and interest in the regular payments but may have a
balloon payment at the end.
◉ A _________________ mortgage covers real estate as well as personal
property included in real estate.. Answer: Package Mortgage
,◉ The four variables in real estate financing that affect the mortgage
payment are?. Answer: Amount Borrowed, Interest Rate, Term of
Loan, Frequency of Payments
◉ The ________________ _______________________ rate or discount rate
reflect the return on the investment.. Answer: overall yield
◉ The summation concept is a theoretical procedure in developing
the discount rate for a real estate investment and is comprised of the
following four parts:. Answer: Safe Rates, Risk Rate, Rate for Non
Liquidity, Rate for Management
◉ The ________________ __________________ rate reflects the relationship
between the real estate taxes and the value of the property.. Answer:
effective tax
◉ To obtain value using the IRV formula, one must _____________ the
income by the rate.. Answer: divide
◉ To obtain value using the VIF formula, one must ______________ the
income by the factor.. Answer: multiply
◉ Return of Investment. Answer: Recapture Rate (Getting Back the
amount invested)
,◉ Investors are averse to risk. A savings account insured by the
government is relatively free of risk. Real estate may be a risky
investment due to a variety of factors affecting its economic
environment.. Answer: Safety
◉ A savings account is accessible on demand for conversion to cash.
Real estate investment requires time to convert to cash because it
needs time to secure a contract and sell. This may take week or even
months before the title and the seller is paid.. Answer: LIQUIDITY
◉ A savings account can be opened with very small amount of
money, real estate generally requires a substantial commitment of
capital.. Answer: Size
◉ The entire investment in a savings account can be used as
collateral for a loan. However, lending institutions generally will only
allow a percentage of the real estates market value to be used as
collateral.. Answer: COLLATERAL
◉ A savings account can be opened and closed in very short period.
Real estate generally requires a longer term commitment of funds
but can be shorter for value added investments. A value added
investment involves buying a property, improving it in some way,
and sell it at an opportune time for gain.. Answer: Time
, ◉ A savings account requires very little management decision
making by the owner. A real estate investment on the other hand
requires substantial investment management decision making on
the part of the owner.. Answer: Management
◉ Savings accounts often lose purchasing power as a result of
inflation. Typically real estate tends to appreciate over time and can
be used as hedge againts inflation.. Answer: Appreciation
◉ There no income tax advantages for for savings accounts. All
interest is taxed directly. Real property may offer the opportunity to
reduce, defer, or eliminate income taxes.. Answer: Income Tax
Advantages.
◉ The borrowing of funds in hopes of earnings greater return than
the cost of the borrowed funds. Investors cannot borrow money at a
rate which would allow successful investment in a savings account.
Investors in real estate often can borrow money at a lower rate that
the yield rate on the real estate investment.. Answer: LEVERAGE
◉ The purchase of real estate is often financed entirely by thee
purchaser without fund provided by another party. A significant
amount of commercial real estate is financed entirely by this..
Answer: cash
