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TEXAS REAL ESTATE FINANCE EXAM/ LATEST
UPDATE-2025/ACTUAL 200+ QUESTIONS AND
VERIFIED CORRECT ANSWERS GUARANTEED A+
$1352.47 - CORRECT ANSWER : The sales price is $325,000 with a loan-to-value of85%. The interest rate is 5 7/8%. The term is 30 years. What is the amount of interestthe buyer will pay the first month of the loan? Use an actual year. A) $1592. B) $1565. C) $1330. D) $1352. $2548.87 - CORRECT ANSWER : Calculate the montly payment on an 80% loan with a sales price of $350,000 for 30 year term at 6.75%. The annual taxes are $7300 and the annual insurance premium is $1480. The loan factor is 6.49 per $1000. A) $2548. B) $3003. C) $2668. D) $2945. $4250.00 - CORRECT ANSWER : The Smiths have long-term debts of $365 and youhave estimated their monthly mortgage payment to be $1250 with lender ratios of 33%/38%. How much income must they earn monthly to qualify? A) $4250. B) $2984. C) $2592. D) $4151. $4560 - CORRECT ANSWER : The lender is charging 2 discount points on a home thatis priced at $285,000. The buyers are obtaining 80% financing. What would be the dollar amount of the discount? A) $ B) $925 C) $4560D) $ 2 mths insuance reserve; 3 mths tax reserve; 2 mths PMI reserve - CORRECT ANSWER: Prepaids are items that are typically collected at closing: ; ;
3 - CORRECT ANSWER : Regulation Z is the Truth in Lending Act (TILA). it provides a day right or rescission. The purchaser may rescind the transaction within _ days afterthe date of consummation of the transaction. 3a + 3b = 3c - equal! No exceptions!! In the contract remember + must always 80% - CORRECT ANSWER : Calculate the loan-to-value if a borrower is purchasing ahouse for $125,000 and is putting down $25,000 as a down payment. A) 100% B) 80% C) 85% D) 90% 80% - CORRECT ANSWER : PMI is generally required on a conventional loan with aloan-to- value ratio in excess of: A) 75% B) 80% C) 70% D) Determined by the lender 90 - CORRECT ANSWER : To qualify for the Texas Veterans Land Fund, the Texas Veteran must have served consecutive days active duty since September 16, 1940and be a resident of Texas at the time of entry into the service, or at least two consecutive years prior to filling out the application. A single number used by the lender to predict the likely future perfomance of a person'sloan
- CORRECT ANSWER : What is credit scoring? A) Underlying items of importance on your credit report B) The federal legislation that prevents discrimination regarding credit applicantsC) The score you receive when you open a revolving charge card D) A single number used by the lender to predict the likely future perfomance of aperson's loan AAA Credit - CORRECT ANSWER : Lenders will look at all of the following creditreporting agencies for the credit rating of the buyer EXCEPT: A) Equifax B) Trans Union C) Experian D) AAA Credit CORRECT ANSWER:
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D) APR
APR; total payment ; late payment charges - CORRECT ANSWER : To comply with Regulation Z, the lender is required to disclose all of the following to the borrower: Assumption - CORRECT ANSWER : What is the opposite of an alienation clause? A) Amortization B) Escalation C) Assumption D) Acquisition Assumption clause: - CORRECT ANSWER: : The clause in the mortgage allowing the purchase to take over the owner's existing loan. the new ownerdoes not necessarily take personal responsibility. back-end - VA uses only one ratio, the , to qualify veterans. That back-end ratio is 41% back-end ratios - mortgage payment, plus all recurring debt. Balloon mortgage - with a , the amortized payment of a mortgage remains constant over the period of the loan but leaves an outstandingbalance to be paid at the end of the term. Bankers - originate. Mortgage can service the loans they A) Brokers B) Processors C) Bankers Blanket mortgage - CORRECT ANSWER : : is normally used to finance the purchase of raw land. This mortgage allows the developer to include more than one property Blanket mortgage - CORRECT ANSWER: A form of mortgage covering several houses or number of lots is a: A) Package mortgage B) Participation mortgageC) Budget mortgage D) Blanket mortgage CORRECT ANSWER: the - reflects their new CORRECT ANSWER:
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Borrower - CORRECT ANSWER: Usury laws put a cap on interest rates. These lawsprotect the: A) Seller B) BorrowerC) Broker D) Lender bought and sold - CORRECT ANSWER: The secondary market is a national market inwhich mortgages secured by real estate in all parts of the United States are . budget mortgage - The requires equal payments to be made by the borrower to cover principle and interest for the life of the loan. Budget mortgage - CORRECT ANSWER: The type of mortgage that requires equal payments of principal and interest to be made for the life of the loan by the borrower isa(n): A) Blanket mortgage B) Construction mortgageC) Budget mortgage D) Package mortgage buying loans, issuing mortgage backed securities - CORRECT ANSWER: Secondarymarket agencies have two main activities: 1) and 2) . Cap - CORRECT ANSWER: : A limit placed on payments, interest rates and/or the balance of a loan. Certificate of Reasonable Value - CORRECT ANSWER: To determine the value of aproperty on a VA loan, the lender uses: A) An appraisal B) Comparable market analysis C) Certificate of Reasonable ValueD) Broker price opinion CERTIFICATE OF REASONABLE VALUE(CRV) - CORRECT ANSWER: the lender civil liability for actual and punitive damages in individual or class actions. - CORRECTANSWER: Failure to comply with the Equal Credit Opportunity Act's Regulation B can subject a financial institution to and or must obtain a ( ) to verify value of the property
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DIRECT ENDORSEMENT - CORRECT ANSWER: Some lenders have the authority toapprove FHA loans in-house without submitting the file to the FHA regional office. This directing consumers toward a particular title company for a fee - CORRECT ANSWER:RESPA restricts or prohibits: kickbacks or fees charged for services not performed during the closing process; the amount of reserves a lender can require for taxes and Disability - CORRECT ANSWER: The Federal Equal Credit Opportunity Act prohibitslenders from discriminating against potential borrowers on the basis of all of the following EXCEPT: A) Sex B) National origin C) Source of incomeD) Disability discount point - A is an amount equal to 1% of the principle amount of the note(loan). Loan discount pts are a one-time charge assessed atthe closing by the lender to increase the yield on the mortgage loan (and buy the interest rate down for the mortgagor(borrower)) Discount rate - CORRECT ANSWER: is the rate the Federal Reserve charges its member bank to borrow money Discount rate - CORRECT ANSWER: The rate the Federal Reserve charges itsmember banks to borrow money is called the: A) Discount rate B) Prime rate C) T-bill rate D) Usury rate encumbrance - CORRECT ANSWER: : A right , lien, or claim attached to real property that passes with the title (i.e. easements, judgment liens, mortgage liens). These may reduce the value of the property. Equal Credit Opportunity Act (ECOA) - CORRECT ANSWER: The ( ) states it shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction-- on the basis of race, color,religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); because all or part of the applicant's income derives from any public assistance program;etc.. insurance in a mortgage escrow, and _ process is called , or an in-house approval.
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Estimated taxes - CORRECT ANSWER: To comply with the advertising portion of Regulation Z, if you advertised the monthly payment for the property you would also berequired to advertise all of the following EXCEPT: A) Down payment B) Estimated taxes C) Amount of the loan D) APR Fair Credit Reporting Act - CORRECT ANSWER: In 1970, the first was passed. For the first time, this gave each individual the right to inspect his file, correct any errors and make explanatory statements to supplement the file. False - CORRECT ANSWER: A title policy guarantees that you will be able to sell yourproperty. True or False? False - CORRECT ANSWER: Private Mortgage Insurance is insurance for theborrower. True or False? A) True B) False False - CORRECT ANSWER: VA loans require mortgage insurance if more than 80%is financed. A) True B) False Federal Deposit Insurance Corporation (FDIC) - CORRECT ANSWER: ( ) is a federal agency that insures deposits in commercial banks up to $250,000 and , along with the Federal Reserve System, regulates banks and bankingprocedures. Federal Reserve - The has two primary methods of controlling the flow of money in the United States. They control the flow of money bytheir availability to change the reserve requirements of the banks and/or changing the discount rate charged to banks. Federal Reserve - loan interest rate. The drives the mortgage Federal Reserve Board - purposes of Regulation Z The carries out the FHA - CORRECT ANSWER: offered to insure lenders against losses due to non- repayment when they made loans on both new and resale homes. That is why the
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. Basically the lenders like making VA loans because there is verylimited risk for the lender since the loan is guaranteed by the federal government. Gross income - CORRECT ANSWER: The amount the borrower makes prior to any deductions for taxes or insurance is: A) Guaranteed incomeB) Net income C) Gross income D) Gross margin have at least 75% or its total assets invested in real estate; derive at least 75% of its gross income from rents or mortgage interest; have no more than 20% of it's assets invested in taxable RIETs subsidiaries - CORRECT ANSWER: A REIT must: be structured as a corporation, trust, or association; be managed by a board of directors ortrustees; have transferable shares or transferable certificates of interest; otherwise be taxable as a domestic corporation; not be a financial institution or an insurance company; be jointly owned by 100 persons or more; have 95 percent of its income derived from dividends, interest, and property income; pay dividends of at least 90% of the REIT's taxable income; have no more than 50% of the held by five or fewer individuals during the last half of each taxable year (5/50 rule); _ _ Homestead - CORRECT ANSWER: : In the Texas Constitution, a principle residence of a family or adult single person is protected from forced sale for all debt except: property taxes; federal tax liens of both spouses; a home equity lien.....etc... HUD- 1 - CORRECT ANSWER: : a settlement statement form required by HUD. HUD- 1 - CORRECT ANSWER: What form is used at closing to show the fees paid bythe buyer and seller in a One-to-Four Family Residential Contract? A) Commitment Letter B) Corporate declarationC) HUD- 1 D) Escrow agreement Insurance on an FHA loan - CORRECT ANSWER: MIP refers to: A) VA's guaranty program B) Private mortgage insurance on a conventional loanC) Mutual insurance premium D) Insurance on an FHA loan
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government guaranteed loan - CORRECT ANSWER: The VA loan is a
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conforming loan limit. Lien - CORRECT ANSWER: A legal encumbrance of one person on the property ofanother as security for a debt or charge is called: A) Leverage B) Lease C) Lien D) Loan-to-value lien theory - Texas is a state. loan amount - CORRECT ANSWER: A discount point is 1% of: A) market valueB) sales price C) cost D) loan amount Loan Portfolio - CORRECT ANSWER: is the total of all the loans that a financial institution or other lender holds at a given time. A list, distribution, or groupingof mortgage loans. LTV - CORRECT ANSWER: The amount of money the lender will loan in comparisonto the price of the property is called: A) MIP B) APR C) FHA D) LTV Meets the underwriting standards of the Federal National Mortgage - CORRECT ANSWER: To a lender, a "conforming loan" is one that: A) Meets the underwriting standards of the Federal National MortgageB) Is made in compliance with the generally accepted guidelines C) Is expected to be held in the portfolio of the lender who is making the loanD) Is made in even on hundred dollar increments Mortgage bankers - CORRECT ANSWER: originate loans where mortgage brokers bring together the lender and the borrower and "arrange" the loan. Insurance; rent - CORRECT ANSWER: Paid in Advance : ; Jumbo loans - CORRECT ANSWER: are loans that are over the
D) Collateral Origination Fee - lender for taking and processing the loan application Origination fee - CORRECT ANSWER: The fee charged by the lender for taking andprocessing the loan application is known as: A) Origination fee B) Discount fee C) Broker's fee D) Guarantee fee Package mortgage - CORRECT ANSWER: : permits a home buyer to borrow money from a single lender, not only on the value of the land and improvements,but also on the value of equipment, such as appliances PITI - CORRECT ANSWER: Principal, interest, taxes, insurance PMI - CORRECT ANSWER: Mortgage insurance for conventional loans is referred toas: A) GPI B) LTV C) PMI D) MIP PMI - CORRECT ANSWER: To figure out the PMI it is the loan amount x what ever thepmi factor is divided by 12 that =s the monthly premium. Principal - CORRECT ANSWER: calculating principal and interest: multiply x the loan amount by the factor then divide by 1000 this is the PI. To determine the interest only, multiply the loan amount by the interest rate. this is the annual interest. divide by 12 to get the monthly interest. subtract the I from the PI to get the processor - CORRECT ANSWER: : an individual who gathers the loan application and all of the required supporting documentation ( including the property appraisal, credit report history, income, and expenses) so that a lender can consider theborrower for a loan. Processor - CORRECT ANSWER: An individual who gathers the loan application andall of the required supporting documents to prepare the loan for approval is the: A) Underwriter B) Loan officer C) Mortgage CORRECT ANSWER: : the fee charged by the
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D) Processor Prorations - and income between the buyer and the seller in proportionate shares. purchase money mortgage - structured many ways. :fixed rate; adjustable rate; balloon Redlining - refuse or limit loans and mortgages within specific geographic areas, especially older orso-called "bad risk" neighborhoods, including inner-city neighborhoods. also when a lender has refused to make a loan to a potential buyer because of the location of the property. Redlining - CORRECT ANSWER: A lender has refused to make a loan to a potentialbuyer because of the location of the property. This is known as: A) Panic peddlingB) Steering C) Blockbusting D) Redlining Regulation Z - Because of credit institutions are required by the federal government to inform borrowers of the true cost of obtainingcredit. Regulation Z - CORRECT ANSWER: The federal regulation prescribed by the FederalReserve Board to carry out the purposes of the Truth-in-Lending Act is: A) Recasting B) Regulation ZC) REO D) RAM REIT - To be a , a company must distribute at least 90 percent of its taxable income to shareholders annually in the forms of dividends. RESPA - CORRECT ANSWER: The "Good Faith Estimate" is required of lenders bythe regulatory body: A) TREC B) Fair housing C) DYPA D) RESPA CORRECT ANSWER: is a discriminatory practice by which banks CORRECT ANSWER: can be CORRECT ANSWER: : are defined as the dividing of expenses
borrower pays interest only for a limited amount of time and at the end of the term, the principle is due. Term or straight term mortgage - CORRECT ANSWER: What type of loan do you get when you pay interest only for a limited amount of time and then at the end of the termthe principal is due A) Wraparound mortgageB) Open-end mortgage C) Balloon loan D) Term or straight term mortgage That credit institutions are required by the federal government to inform borrowers ofthe true costs of obtaining credit. - CORRECT ANSWER: What does Regulation Z mean? A) That all lenders treat their customers fairly and equally B) The federal government can "take over" any primary lender they find insolvent C) A regulation which states that lenders are not allowed to make loans on any propertylarger then six lots D) That credit institutions are required by the federal government to inform borrowers ofthe true costs of obtaining credit. That expires three business days after the date of consummation of the transactions - CORRECT ANSWER: Regulation Z provides a right of rescission: A) To first mortgages to finance the purchase of a residential condominium unitB) To all residential loans on real estate C) That expires upon default of the loan D) That expires three business days after the date of consummation of the transactions The buyer's credit history - CORRECT ANSWER: To comply with Regulation Z, thelender is required to disclose all of the following EXCEPT: A) Annual percentage rateB) Total payment C) The buyer's credit historyD) Late payment charges the deferred payment price or total payments - CORRECT ANSWER: The Truth-in- Lending Act requires that five disclosures are required if certain "Trigger Terms" are used in advertising: the cash price or the amount of the loan; the amount of the down Taxes ; Interest - CORRECT ANSWER: paid in arrears: ; Term or straight loan - CORRECT ANSWER: : a loan where the
payment or a statement that none is required; the number, amount and frequency of The Federal Reserve - CORRECT ANSWER: What drives the mortgage loan interestrate? A) Mortgage B) The Federal Reserve C) Prices of mortgage-backed securitiesD) Federal government The selling and purchasing of closed real estate mortgage loans - CORRECTANSWER: The "secondary market" refers to: A) An institution that purchases second mortgagesB) Any lender that is a second lien holder C) The selling and purchasing of closed real estate mortgage loansD) An institution that makes second liens the settlement costs; the APR; provide the HUD-1 form to the buyers - CORRECT ANSWER: RESPA requires the following items to be disclosed to the buyers: The total payment is the same each month but the allocation to interest is different each month.
- CORRECT ANSWER: With a fully amortized mortgage or deed of trustloan: A) The interest portion of each payment remains the same throughout the entire term ofthe loan B) Periodic payments are made the final payment is larger C) The total payment is the same each month but the allocation to interest is differenteach month. D) The total payment varies each month but a fixed amount is credited toward theprincipal. Third Party Financing Addendum - CORRECT ANSWER: The gives the details of the lender's loan to the borrower To maintain an active secondary money market for mortgages - CORRECT ANSWER:What is the primary responsibility of the Federal National Mortgage Association? A) To insure loans for qualified purchasers B) To determine the number of discount points charged on a loanC) To prohibit redlining D) To maintain an active secondary money market for mortgages
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repayments; the APR; and _ _
A) FHA
B) Conventional C) Hard money D) VA Wraparound mortgage - around the existing mortgage. It is illegal for real estate agents to write contracts withthis financing. zero down payment - CORRECT ANSWER: If a veteran has full VA entitlement, he/shemay be able to purchase the property with. After analyzing the neighborhood, an appraiser will study all of the physical aspects ofthe specific property being appraised except for which of the following? - CORRECT ANSWER: Highway accessibility Al purchases a factory as an investment. He installs sprinklers in the building. What riskcontrol technique is he practicing? - CORRECT ANSWER: Reducing Alex bought a property valued at $850,000 which has an annual net operating incomeof $102,500. What is the capitalization rate? - CORRECT ANSWER: 0. Before an option is exercised, which of these costs will the optionee incur? - CORRECT ANSWER: Option fee Bill bought a property for $270,000. The value of the building on the property is $220,000. If the building has an economic life of 50 years, what is the depreciated valueof the building after 5 years? - CORRECT ANSWER: $198,000. Commercial banks participate in real estate finance though all but which of thefollowing methods? - CORRECT ANSWER: Secondary mortgage market Fannie Mae and Freddie Mac are able to replenish their own funds by doing what? - CORRECT ANSWER: Selling mortgage-backed securities How is the payoff of a construction loan normally accomplished? - CORRECT ANSWER: With a takeout loan In Texas, what is the maximum late payment penalty allowed? - CORRECT ANSWER:no restrictions Investor Pete specializes in obtaining properties from investors in financial difficulty. What investment strategy does Pete practice? - CORRECT ANSWER: Opportunistic Jim Smith wants to purchase a vacation home and have it double as an investment.What is the maximum amount of time per year that Jim and his family can stay in the CORRECT ANSWER: new financing is wrapped
home and still be able to take the depreciation? - CORRECT ANSWER: 14 days or 10percent of the time rented Mary is getting a $120,000 loan at 6.5 percent and will pay 3 discount points. What willthe effective interest rate be? - CORRECT ANSWER: 0. RESPA applies to which of these? - CORRECT ANSWER: First mortgage on a single-family home Sam Frank is a retired Army officer who wants to purchase a new home using a VA loan. In 2000, Sam used his VA guarantee of $36,000 when he purchased his currenthome. Based on the VA's maximum guarantee of $104,250 and his partial eligibility, how much of a loan can Sam get with no money down? - CORRECT ANSWER: $273, The Consumer Financial Protection Bureau (CFPB) requires the use of the Closing Disclosure (CD) for which types of transactions? - CORRECT ANSWER: Residentialtransactions financed by a federally-related loan The cost recovery period for land improvements is how long? - CORRECT ANSWER:15 years The entity holding title to a property during the term of a deed of trust is called what? - CORRECT ANSWER: Trustee The successful bidder at a judicial foreclosure sale receives which of thesedocuments? - CORRECT ANSWER: Certificate of Sale The Tax Reform Act of 1986 established an entity that can issue multiclass securities.What is this entity called? - CORRECT ANSWER: REMIC The type of estate that has a definite beginning and ending date is known as what? - CORRECT ANSWER: Estate for years Under which type of loan does the portion of payment that is applied to principalincrease regularly over time? - CORRECT ANSWER: Growing Equity What are the steps in the sales comparison approach to estimating value? - CORRECTANSWER: Choose appropriate comparable properties, adjust the comparables for the differences and estimate the value. What does the term "mixed-use development" mean? - CORRECT ANSWER: Morethan one use for a single building What is a disadvantage of a graduated-payment loan? - CORRECT ANSWER: Thisplan could result in negative amortization.
