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1.
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The ____________ is referred to as a closing, settlement, or escrow.
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  Loan process.
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Title closing process.
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Qualification process.
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Title search process.
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2.
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Usury occurs when the lender
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Collects more than the maximum legal rate of interest.
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Charges less than the maximum legal rate of interest.
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Loans more than 95% of the appraised value of the property.
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Charges the state's legal limit.
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3.
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What types of credit transactions does Regulation Z cover? I) Credit in excess of $25,000; II) All real estate transactions involving consumers; III) All real estate transactions involving corporations
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I only.
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II only.
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II and III only.
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I and II only.
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4.
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Regulation Z requires disclosure of credit information regarding: I) finance charges; II) APR; or III) date of closing?
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I only.
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II only.
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I and II only.
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I, II and III.
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5.
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Which of the following must be disclosed as a finance charge under Regulation Z?
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Discount points.
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Title examination fees.
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Appraisal fees.
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Survey fees.
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6.
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The annual percentage rate (APR) is the annual cost of credit and is
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The same as the contract rate in a note.
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A rate that includes any adjustments for service charges and discount rates.
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An estimate of the nominal interest rate on the mortgage.
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The same as the debt service.
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7.
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A mortgage lender's practice of refusing to make mortgage loans in certain neighborhoods because of high risk or lack of profit potential is called
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Blacklisting.
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Mortgage screening.
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Redlining.
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Black balling.
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8.
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In order to prevent the practice of redlining and divestment in central city areas, Congress passed the ________________.
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Fair Credit Reporting Act
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Community Reinvestment Act..
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National Flood Insurance Program
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Community Divestment Act.
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9.
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All federally chartered savings and loan associations must be members of the: I) Federal Home Loan Bank; II) Federal Deposit Insurance Corporation; III) Federal Reserve System; IV) Federal Savings Insurance System.
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I only.
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I and II only.
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I and III only.
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I and IV only.
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10.
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Fannie Mae and Freddie Mac operate in which mortgage market?
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Primary market.
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Secondary market.
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Subprime-market.
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Hedging market.
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11.
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Which of the following is a buyer in the secondary mortgage market?
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Federal Reserve System.
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Veterans Administration.
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Federal Housing Administration.
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Federal National Mortgage Association.
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12.
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The mortgage purchase procedure used by the FNMA is conducted through an auction process referred to as a (an)
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Closed market auction.
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Open market auction.
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Free market system auction.
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Straight pass through auction.
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13.
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When using the fully amortized level payment mortgage
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The amount of payment on the principal stays the same.
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The interest payment is always greater than the principal payment.
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Each payment remains the same.
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A lump sum payment is made at the end of the mortgage.
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14.
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In a construction loan mortgage
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The funds are advanced before construction begins.
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The funds are not advanced until construction is completely finished.
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The loan is advanced in installments at various stages of construction.
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Interest on the total loan begins at the beginning of construction.
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15.
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The most predominant form of conventional mortgage is the
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Fixed rate conventional mortgage.
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Variable rate conventional mortgage.
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Adjustable rate mortgage.
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FHA mortgage.
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16.
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A conventional loan would differ from a FHA or VA loan in that the conventional mortgage loan would have
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Lower monthly payments.
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Lower loan-to-value (LTV) ratio.
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Lower interest rates.
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Lower down payment requirements.
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17.
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If a purchaser using FHA financing is paying more than the appraised value, the difference between the appraised value and the sales price
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Can be a junior mortgage.
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Can be a straight mortgage.
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Must come from the purchaser's assets.
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Can be a purchase money mortgage.
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18.
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If the buyer gives a note or bond and a mortgage to the seller as part of the purchase price, the resulting mortgage is commonly referred to as a (an)
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Purchase money mortgage.
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Package mortgage.
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Security mortgage.
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Open end mortgage.
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19.
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If the buyer of a home wanted to include in the terms of a mortgage the financing of such items as a stove, refrigerator and air conditioning, the mortgage used would be a (an)
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Open mortgage.
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Wrap around mortgage.
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Package mortgage.
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Blanket mortgage.
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20.
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A buyer agrees to purchase a tract of land for $40,000. The buyer is only able to get a mortgage for $32,000. Rather than let the deal fall through, the seller agrees to accept $4,000 cash and a note for the remaining $4,000. This is known as what?
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A conventional loan.
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A home equity mortgage.
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A purchase money mortgage.
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A reverse mortgage.
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21.
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A mortgage loan which gives the mortgages a fixed interest return plus a percentage of gross sales is called a (an)
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Blanket mortgage.
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Wrap around mortgage.
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Participation mortgage.
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Insured mortgage.
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22.
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________________________ is NOT one of the indexes used in adjustable rate mortgage.
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London Interbank Offered Rate (LIBOR).
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Fund rate.
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1 year treasury bills.
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San Francisco District 12 cost of funds.
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23.
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The term lenders use to describe the relative amount of money they will loan on a given piece of property is the
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Debt to equity ratio.
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Times interest earned.
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Loan to value ratio.
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Gross income multiplier.
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24.
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Before you invest any funds, you should evaluate
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Your present financial condition.
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The financial market condition.
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Your tax situation.
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Your risk profile.
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25.
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What is NOT a source of investment funds?
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Gift.
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Disposable income.
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Other people's money.
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Tax rebates.
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26.
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Which of the following is least important in making investment decisions?
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Liquidity.
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Maturity.
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Return.
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Risk.
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27.
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Investment vehicles do NOT include
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Real estate.
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Futures and options.
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Gambling.
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Gold and silver.
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28.
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Which of the following is NOT an example of real assets?
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Corporate stocks.
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Real estate.
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Commodities.
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Gold.
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29.
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A principal disadvantage of real estate is that it does NOT provide a hedge against
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Inflation.
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Interest rate risk.
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Purchasing power risk.
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Market risk.
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30.
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A rapid increase in inflation will cause interest rates to _________ , and bond and stock prices to __________.
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Fall, rise.
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Fall, fall.
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Rise, fall.
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Rise, rise.
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31.
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The return on investment typically comes from two sources: __________ and capital gains (losses).
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Selling price.
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Liquidity.
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Current income.
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Purchase price.
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32.
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Current income is derived from income property by
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Appreciation.
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Depreciation.
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Rental payments.
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Tax savings.
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33.
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An advantage to buying a home to the person who is to occupy it as his or her personal dwelling is its
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Relatively low maintenance.
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Liquidity.
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Equity buildup.
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Depreciation write off.
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34.
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Which of the following is NOT an advantage of buying has over renting?
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Appreciation.
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Tax deductibility.
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Low maintenance.
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Tax savings.
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35.
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Owning a(n) _____________ is still the best tax shelter there is.
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Bond.
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Home.
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Stock.
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Mutual fund.
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36.
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Considerations in arriving at how much one should pay for a home include all the following EXCEPT
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Escrow fees.
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Insurance.
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Amount of mortgage payments.
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Property taxes.
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37.
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The most a typical home buyer should spend on housing costs is generally ___________ of his or her monthly take home pay
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38.
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You should consider a fixed rate loan over an ARM, if you
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Plan to move in the near future.
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Prize the security of constant payments.
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Expect your income to fluctuate.
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Have no plan for sizable debts, like auto or educational loans.
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39.
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The principle of maximizing the use of other people's money (OPM), providing a large percentage of return on a relatively small outlay is called
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Liquidity.
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Appreciation.
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Cash flow.
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Leverage.
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40.
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Depreciation taken as a deduction on annual income tax is a form of
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Tax increment.
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Tax evasion.
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Tax shelter.
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Cash outflow..
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41.
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Types of direct real estate investments consists of all the following EXCEPT
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Undeveloped land.
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Commercial.
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Chattel.
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Residential rental.
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42.
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An example of commercial property is
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Condominiums.
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Motels.
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Undeveloped land.
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Houses.
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43.
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One drawback to investing in real estate is the
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Potential for appreciation.
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Lack of liquidity.
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Inflation hedge.
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Tax benefits.
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44.
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__________________ is NOT a form of real estate investment
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Apartments.
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Improved land.
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Oil and gas.
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Unimproved land.
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45.
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A closed end investment company that invests money in mortgages and various types of investment real estate is called
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Mutual fund.
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Limited partnership.
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Insurance company.
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REIT.
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46.
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REITs differ from other real estate investments because
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Their income is tax exempt.
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Their shares are publicly traded.
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They only offer capital gains.
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The investor is guaranteed income.
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47.
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What type of REITs invests in income-producing properties?
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Equity REITs.
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Mortgage REITs.
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Securitized REITs.
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General REITs.
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48.
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Certain terms used in real estate investments have applications similar to those used in security analysis. For example, the price earnings (P/E) ratio found in the analysis of stocks is equivalent to _____________ in real estate investment analysis.
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Earnings on sales price.
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Net spendable index.
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Cost recovery.
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Gross income multiplier.
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49.
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Which of the following is equal to before-tax cash flow from operations?
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Net operating income û Debt service.
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Gross operating income û Debt service.
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Gross operating income û Operating expense.
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Net operating income û Income tax.
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50.
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Calculate the capitalization rate for the following investment: Net operating income (NOI) = $18,750; Purchase price = $150,000; Equity = 20%
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