California Real Estate Salesperson Practice Exam 1: 2024-2025 Latest Update, Exams of Real Estate Management

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California Real Estate Salesperson Practice Exam 1 - EBSCO

2024-2025 Latest Update.

Which of the following is considered real property? A. motor homes and coaches B. land C. chattel real D. mobile homes resting on their original wheels - Correct Answer Choice B Land, appurtenances permanently affixed to the land, minerals in the ground, and the air above the ground are all examples of real property. Agent rates of commission on sales of real property are A. set by the California Department of Real Estate. B. a fixed six percent of the final sales price for residential properties. C. negotiable between buyer and seller. D. negotiable between the principal and agent. - Correct Answer Choice D A commission rate earned for services resulting in a real estate sale are negotiated between the selling agent and agent's principal as part of the agency agreement. Which is the usual method for commercial property valuation? A. comparative analysis B. capitalization rate C. cost basis D. property tax valuation - Correct Answer Choice B Commercial, industrial, and non-owner-occupied residential properties are usually valued as a function of the gross monthly rental income they can command in the market place divided by the capital investment. Which of the following does NOT warrant that the seller owns the property?

A. grant deed B. quitclaim deed C. gift deed D. land patent - Correct Answer Choice B Quitclaim deeds carry no warranty that the seller owns the property. The 1968 Fair Housing Act as amended EXEMPTS which of the following? A. apartment buildings B. duplex residential housing managed by a licensed real estate agent C. rooms in owner-occupied residential units D. residential homes in resort areas managed by licensed property managers - Correct Answer Choice C Owner-occupied, residential housing is exempt from the 1968 Fair Housing Act as amended. Examples include additional dwelling units ("ADU"), rental of rooms in an owner-occupied residential property, and 1 - 4 residential housing units in which the owner lives in one of the four units. Real property is NOT characterized by which of the following? A. land B. that which is permanently attached to the land C. that which is appurtenant to the land D. that which is movable by law - Correct Answer Choice D Any property characterized by mobility is defined as personal property, not real property. There are several methods to legally describe land in California for purposes of sale, lease, or financing. Which of the following methods is NOT legal? A. county assessor's parcel number B. lots, blocks, and tracts C. U.S. Government Survey

D. metes and bounds - Correct Answer Choice A County accessor's parcel numbers can and often are renumbered. Parcel numbers are used for property tax assessment purposes only. The U.S. Government Survey method uses which descriptors to identify property? A. benchmark points B. tiers, ranges, and townships C. property starting points D. state line markers - Correct Answer Choice B These criteria are part of the system established to identify all public lands by the use of "base lines" and "meridian lines" from a specific starting point. Public controls of real estate and its uses is a police power of the state derived from which source? A. the Articles of Confederation B. the Declaration of Independence C. local zoning ordinances D. the U.S. Constitution - Correct Answer Choice D The U.S. Constitution, 10th Amendment (Bill of Rights), states that the police powers "not delegated to the United States" are thus granted to the individual states to establish and enforce laws protecting the welfare, safety, and health of the public. The exercise of littoral rights pertains to the use of A. river water. B. lake water. C. recycled water. D. moving water. - Correct Answer Choice B Use of static water from a lake, bay, ocean, or sea is considered a littoral right.

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Use of moving river water is a riparian water right.

Use of recycled water is considered neither a littoral nor a riparian water right Moving water, such as a river, stream, or creek, is a riparian right. The next section number located just south of Section 33 in T4N, R3E Humboldt Base Line and Meridian is A. 4. B. 5. C. 34. D. impossible to ascertain from the information given. - Correct Answer Choice A Section 4 is located in the next township T3N, which is located directly south of T4N in the same R3E Humboldt Base Line and Meridian.

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Section 5 would touch the southwest corner of Section 33. Section 5 is not directly south of Section 33. Section 34 is located directly east of Section 33 in T4N, R3E Humboldt Base Line and Meridian. All 36 sections within all Townships are identical in the U.S. Government Survey method of land description. A monetary encumbrance on land is known as A. an easement. B. a promissory note. C. an I.O.U. D. a lien. - Correct Answer Choice D A physical encumbrance is an easement. A monetary encumbrance is a lien. A deed of trust filed at the county recorder's office is an example of which of the following?

A. a tax burden B. something that takes precedence over property taxes C. a lien D. something that is removable at the owner's desire - Correct Answer Choice C A deed of trust is a monetary encumbrance or a lien on the property title. The ownership "bundle of rights" includes A. possession. B. enjoyment. C. exclusion. D. all of the above. - Correct Answer Choice D The "bundle of rights" includes possession, enjoyment, and exclusion—in addition to other rights, including use and disposition. Mineral rights in the land pertain to all of the following EXCEPT A. gold. B. oil. C. coal. D. salt. - Correct Answer Choice B Oil is considered a "fungible" (meaning moving) substance by law, making it personal, not real, property. Ownership of personal property is transferred with which of the following? A. the "pink slip" B. the uniform commercial code form number 1 ("UCC-1") C. the sales receipt D. the deed - Correct Answer Choice A

A trade fixture such as a bookcase used in the normal course of business is the personal property of the bookstore owner provided that the real property is left in the same condition in which it was found. A custom-made bookcase in a bookstore is an example of personal property when it A. is a trade fixture. B. is permanently installed. C. was built into the building upon lease. D. came with the building when originally purchased as described in the sale document. - Correct Answer Choice A A trade fixture such as a bookcase used in the normal course of business is the personal property of the bookstore owner provided that the real property is left in the same condition in which it was found. Covenants, conditions, and restrictions (CC&Rs) are A. private. B. county ordinances. C. state police powers. D. unenforceable. - Correct Answer Choice A Covenants, conditions, and restrictions are a set of rules created for the governance of private communities or neighborhoods. Which of the following is an example of personal property (as opposed to real property)? A. shrub B. garden bench C. basketball hoop cemented into the driveway D. chandelier - Correct Answer Choice B Because a garden bench is not attached to the land, it is an example of personal property.

A single individual who has never been married would most commonly hold title in real estate in which of the following? A. severalty B. singly C. privately D. secretly - Correct Answer Choice A A single or unmarried person who does not share ownership rights with anyone most commonly holds title in severalty, that is, sole ownership. The California Coastal Commission regulates California property boundaries located along the Pacific Ocean. Property boundaries are set by which of the following? A. the mean low tide line B. the average tide line C. the mean high tide line D. the red tide line - Correct Answer Choice C Private property borders are set by the California Coastal Commission law and regulation at the mean high tide line. The beach or coast laying between the mean high tide line and the surf is public accessible property. The presence of lead-based paint in homes or condominiums built before 1978 is A. an optional disclosure. B. required for rental properties only. C. required for owner-occupied properties only. D. required for both owner-occupied purchases and rental properties. - Correct Answer Choice D Both federal and State of California law require disclosure of the potential presence of lead-based paint in any human-occupied building constructed before 1978 without exception.

The government reserves the right of eminent domain according to the 5th Amendment of the U.S. Constitution to take private land for public use. An example of the taking of property for public use would include which of the following? A. a new Walmart store B. a highway bypass C. any property the government wants without just compensation to the owner D. agricultural land - Correct Answer Choice B The taking of private property for a new highway bypass is a uniformly agreed upon exercise of eminent domain given just compensation. A property owner has a lake existing completely within the property boundaries. The property owner has what rights to the water in the lake? A. riparian rights B. ownership rights C. drainage rights D. littoral rights - Correct Answer Choice D Littoral rights pertain to still, non-moving water as found in a lake, ocean or delta. The property owner has the right to use the water in the lake. The water itself is owned in common by society even though the lake lies completely within his property boundaries. One acre of land is a common measurement in rural areas. An acre of land equals which of the following? A. 5,280 feet B. a section in a township C. 43,560 square feet D. 43,560 feet - Correct Answer Choice C This is the definition of an acre of land. Is a 50 - gallon solar water heater, costing $2,000 and requiring hours for installation, considered a fixture and therefore real estate?

A. Yes. B. No, because it is personal property. C. No, because it cost less than $10,000. D. It depends on many factors, including the method of attachment. - Correct Answer Choice D The five tests for determining whether an item is real property are (1) method of attachment, (2) adaptability, (3)relationship of the parties, (4) intention, and (5) agreement ("M-A-R-I-A"). Administration of the Subdivided Lands Act is the responsibility of which of the following? A. individual California county recorder's offices B. the U.S. Environmental Protection Agency C. the California Department of Real Estate D. the California Bureau of Real Estate Appraisers - Correct Answer Choice C The California Department of Real Estate is jointly responsible for administering the California Real Estate license laws and the Subdivided Lands Act. A couple purchases a home together one week before their marriage. They may not hold title to the property in which of the following? A. joint tenancy B. community property C. tenancy in partnership D. tenancy in common - Correct Answer Choice B The couple may not hold title as "community property" as they were not married to each other at the time of purchase and title. A seller executes a grant deed to a buyer but does not record the document at the county recorder's office. This real estate sale and property transfer is A. illegal.

B. void. C. legal. D. voidable. - Correct Answer Choice C This is a legal transfer of real property ownership as long as the grant deed is properly executed. Filing a grant deed (recordation) with the county recorder is recommended but not required. A life estate interest in real property is in effect for the remainder of the A. grantee's life. B. beneficiary's life. C. life of a designated person. D. grantor's life. - Correct Answer Choice C The duration of a life estate is a function of the "life," which can be a third party, the grantor, or the grantee. There are always three parts to a life estate: the grantor, the grantee, and the life. Which of the following is not a basic type of promissory note used to evidence a debt? A. a deed of trust B. a straight note C. a partially amortized note D. a fully amortized note - Correct Answer Choice A A deed of trust is a surety instrument used to secure the debt by real property. It is the security that stands behind the note and acts as collateral for the debt. Which of the following financial terms is never expressed as a percentage? A. the principal B. the interest rate C. the discount rate D. the return on investment (ROI) - Correct Answer Choice A

The principal amount loaned is expressed in whole dollars and cents in both numeric ($100.00) and written (one hundred dollars and no cents) form. When in conflict, the written amount takes precedence over the numeric expression. Examples of negotiable instruments include all except which of the following? A. personal checks B. United States promissory notes C. private promissory notes D. United States savings bonds - Correct Answer Choice D United States savings bonds are not negotiable instruments. They are specifically registered to the purchaser and cannot be traded amongst third parties. Treasury notes are tradable; treasury bonds are not. A married man, James, buys a $300,000 condominium in Palm Springs. He secures a $250,000 fully amortized, 30 - year loan from a mortgage broker. He pays the broker 1 point to reduce the interest rate to 2.654%. How much does James pay the broker? A. $1, B. $3, C. $2, D. cannot be determined from the facts provided - Correct Answer Choice C A point equals 1% (.01) of the borrowed amount. This is also known as an origination fee or a discount fee. $250,000 loan × .01 = $2,500. Question Number 35 Margaret Byer (vendee) has no down payment and is unable to secure a loan to purchase a house and barn on five acres. Carol Rivera (vendor) agrees to finance Margaret's purchase using a land contract with a 20 - year term. When will Margaret acquire title to the property? A. at the close of escrow B. when the total principal is paid C. at the end of the agreed 20 - year term

D. at such time as all the principal and interest are paid in full - Correct Answer Choice D Margaret will secure the title after the principal and interest are paid in full. The Truth in Lending Act (TILA) is a federal law as administered by the Federal Reserve (Regulation Z). It requires its lenders make certain disclosures to which of the following type(s) of borrowers? A. commercial, agricultural, and business B. both commercial and consumers C. consumers only D. agricultural - Correct Answer Choice C TILA and Regulation Z specifically apply to loans for 1 - 4 residential units and are created in the interest of consumer protection and disclosure. CalVet home loans and private sales contracts (land contracts) have one thing in common. What is it? A. Title transfers immediately at close of escrow. B. Both require no money down. C. Title transfers to the buyer once the entire loan principal and interest are paid. D. They have nothing in common. - Correct Answer Choice C In a CalVet home loan, the State of California Veterans Affairs holds title to the property until the loan is paid, at which time the title is transferred to the buyer. In a sales contract (land contract), the seller (vendor) retains title until the buyer (vendee) makes the last principal and interest payment. There are three main types of lenders that finance real estate transactions. What kind of lender is fictional Donald Duck's rich uncle, Scrooge McDuck? A. an institutional lender B. a government-backed lender C. a non-institutional lender D. a private foundation - Correct Answer Choice C

Non-institutional lenders include credit unions, pension plans, mortgage companies, and private individuals like Donald Duck's uncle, Scrooge McDuck.

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Institutional lenders include commercial banks, life insurance companies, and savings banks. Government-backed lenders include CalVet and FHA. Private foundations would be an example of a non-institutional lender. However, fictional Donald Duck's Uncle Scrooge is a private individual. A deed of trust is A. evidence of title. B. a surety device. C. provided by a living trust to the buyer. D. provided by child's guardian to the buyer. - Correct Answer Choice B A deed of trust executed by a borrower (grantor) is given to a trustee (grantee) for the benefit of the lender (beneficiary). The deed of trust encumbers the real property and ties it to the promissory note of the loan. The deed of trust empowers the trustee to sell the property for the benefit of the lender should the borrower default on the loan. All licensed and registered mortgage loan originators (MLOs) in California may set their commissions A. at a minimum of 15% for loans under three years. B. at the Federal Reserve discount rate. C. at whatever commission rate they are able to negotiate. D. in accordance with the California Business and Professions Code. - Correct Answer Choice D The California Business and Professions Code, Division 4, Real Estate (Commissions and Other Requirements) is very specific as to loan broker commission limits. A violation can result in a fine, suspension, or loss of license. In California, mortgage loan brokers can be licensed by which of the following?

A. the Department of Business Oversight (DBO) B. the Department of Real Estate (DRE) C. the California Finance Lenders (CFL) D. all of the above - Correct Answer Choice D In California, all three of these departments license mortgage loan brokers. Which of the following is used in California that makes real property collateral for a promissory note? A. a mortgage B. a deed of trust C. a trust deed D. a grant deed - Correct Answer Choice B A deed of trust conveys bare (naked) legal title to the trustee (but not possession) for the benefit of the lender (beneficiary). Action on a debt proceeds outside the court system and can move quite rapidly.

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A mortgage is generally not used in California to secure a promissory note. A mortgage requires action though the judicial system and can take years to make its way through the courts to satisfy the debt. This is a public procedure. A trust deed is more accurately called a trustee's deed and is used by the trustee of a trust entity (living trust or irrevocable trust) to transfer title. This is not a security device. A grant deed allows the grantor to transfer the bundle of rights consisting of possession, enjoyment, control, and disposition to the grantee. The greatest level of title insurance coverage is associated with which type of policy? A. a Federal Land Title Association (FLTA) policy B. a California Land Title Association (CLTA) policy C. an American Land Title Association (ALTA) policy D. a North American Land Title Association (NALTA) policy - Correct Answer Choice C

The American Land Title Association (ALTA) policy, also known as the "lenders policy," is the greatest level of title insurance coverage and is required for purchase by the borrower. The lender is named as the beneficiary. California Proposition 13 A. allows for tax reassessment of real property for third-party sales. B. ties property taxes to real estate market values. C. caps annual tax increases at 5%. D. all of the above - Correct Answer Choice A California's Proposition 13, also known as the Jarvis-Gann Initiative, allows for county property reassessment in certain circumstances, such as when property changes hands between third parties or after a structural improvement to the property. The four unities of time, title, interest, and possession must be concurrent for parties to hold which of the following types of titles? A. tenants in common B. joint tenancy C. severalty D. community property - Correct Answer Choice B All parties acquiring an interest in the property at the same time, holding the same title, holding 100% interest, and taking possession at the same time may vest as joint tenants. Who can act as an agent when the buying and selling parties have agreed to an escrow for handling the paperwork and funds in a real estate transaction? A. the seller's real estate broker B. a neutral third party C. a family member of either party D. a licensed property insurance agent - Correct Answer Choice B A neutral third party who will facilitate the written terms and conditions of the sale prior to exchange of funds and change of title is critical to a successful transaction

It is common for an escrow agent to prorate rents or property taxes as part of the escrow process. How many days is the basis of proration of monies? A. the number of calendar days in the month B. the number of calendar days in the month except in leap years C. 30 days in the month regardless of the number of calendar days D. 30 days in September, April, June, and November; 31 days in all other months - Correct Answer Choice C Escrow proration is always based on 30 days regardless of actual number of days in the month. This method is fair to both parties. "RESPA" is an abbreviation for an important law relating to the sale of one to four unit residential dwellings. "RESPA" stands for A. the Real Estate Settlement Procedures Act. B. the Real Estate Services and Protection Agency. C. the California Real Estate Subdivision Partition Act. D. the U.S. Real Estate Survey and Property Act. - Correct Answer Choice A The Real Estate Settlement Procedures Act is enforced by the U.S. Department of Housing and Urban Development. It allows borrowers to shop for settlement services for first or subordinate loans on 1 - to 4 - unit residential dwellings. Which of the following is NOT a method of transferring real estate title? A. a witnessed will B. accession C. intestate succession D. a handshake - Correct Answer Choice D Property cannot be transferred by a verbal agreement or handshake. The transfer must be in writing. Individual California taxpayers can expect to pay income taxes on monies received from

A. rental property. B. the purchase price of the property in the year of acquisition. C. gain on the sale of the property. D. increase in market value of the property each year. - Correct Answer Choice A Income derived from rents received on investment property net of expenses and depreciation is reported on IRS Form 1040, Schedule E and is taxable at individual income tax rates. Real estate commission for a property that is in probate is set by A. the administrator appointed by the court. B. the broker's sales agreement with the deceased. C. Superior Court of California order. D. negotiation between the executor and the real estate broker. - Correct Answer Choice C Only a Superior Court of California judge overseeing the probate process has the right to order the real estate broker commission. The executor may make a recommendation, but the court makes the final determination and order. Which of the following requires probate taxes and court costs including attorney's fees? A. a revocable living trust B. a holographic will C. an irrevocable trust D. intestate succession - Correct Answer Choice B Both a witnessed will and a holographic will require probate action through the Superior Court of California to effect the instructions provided by the deceased as to how his or her property is to be distributed. "Escheat" is the term that most closely relates to what process? A. the state taking real property by eminent domain

B. the method by which the state deprives someone of their inheritance C. the way in which beneficiaries receive distributed property from a will (probate) D. the state taking assets if there is no will and are no heirs - Correct Answer Choice D The property will go to the State of California if no will or heirs are found. Potential heirs may make a claim on the assets during a five-year period. The assets are sold if no heirs come forward. The underlying premise for all real estate property valuation is A. individual ownership. B. location. C. availability of money. D. demand for housing. - Correct Answer Choice B "Location, location, location" is the basic tenet underlying all real estate valuation. Identical chicken coops in Pacific Heights, San Francisco, and Modoc County will have a different value due to location. The cost approach, also known as the replacement cost method, is most often used to value property for what purpose? A. property insurance replacement B. divorce proceedings C. sale of the property to relatives D. donation of real property to charities - Correct Answer Choice A Valuation of real property, particularly the structures, not the land, is a common method used for replacing damaged property. Real Estate Appraisers are licensed by the A. U.S. Department of Housing and Urban Affairs (HUD). B. California Department of Real Estate (DRE). C. California Bureau of Real Estate Appraisers (BREA). D. California Department of Real Estate Appraisers (DREA). - Correct Answer Choice C

The BREA is the exclusive California Department of Consumer Affairs bureau engaged in licensing and regulating real estate appraisers. The comparison approach (market data approach) is commonly used to value which of the following? A. a residential tract home for sale in order to secure a home loan B. unique properties like Hearst Castle C. rebuilding of homes lost to California wildfires D. earthquake damage to a swimming pool - Correct Answer Choice A Comparing similar properties, in similar locations, with similar attributes is one of the standard techniques used in the comparison approach to appraisal. When do licensed real estate agents perform appraisals for home sellers? A. all the time B. never C. only for their potential clients D. for their own needs - Correct Answer Choice B Licensed real estate agents never perform appraisals. They are not licensed to do so. A licensed real estate agent may do a comparable analysis in an attempt to estimate the market value of a property for purposes of proposing a listing. That analysis is not an appraisal. Only BREA-licensed appraisers can perform appraisals. In order for an appraisal report to comply with BREA guidelines, it must contain all of the following EXCEPT A. the signature of the BREA licensed appraiser. B. the reason for the appraisal. C. the date of the appraisal. D. the compensation paid for the appraisal. - Correct Answer Choice D The amount of compensation or fee charged or received by the licensed BREA appraiser is not included in the appraisal report.

Commercial property is valued by A. the comparable property around it. B. the gross rents it generates. C. the replacement cost of the building. D. the historic cost of its acquisition. - Correct Answer Choice B Commercial property including leased industrial, leased commercial, leased agriculture, and leased residential properties are valued most commonly using the gross rent multiplier appraisal method The proverb "A bird in the hand is worth two in the bush" is most closely associated with which financial concept? A. $100 today is the same as receiving $100 in six months B. a month waiting on unemployment will gain $10,000 in yearly salary C. the time value of money D. the payback method - Correct Answer Choice C A dollar today is worth more than a dollar in the future due to its potential earning capacity, as well as inflation, etc. Simple interest as expressed in dollars earned on an investment can be calculated using which of the following formulas? A. P * R = I B. P * I = R C. P * 1 * R = I D. none of the above - Correct Answer Choice A P (principal expressed in dollars) * (multiplied by) R (rate expressed as a decimal) = (equals) I (interest earned as expressed in dollars). For example, $100 * .04 = $4.00. The Truth in Lending Act requires all consumer, home loan, and refinance loan interest rates be published as

A. both numbers and words. B. effective interest rate (EIR). C. simple interest. D. annual percentage rate (APR). - Correct Answer Choice D Presentation of the annual percentage rate (APR) is required regardless of the stated interest, face interest, or simple interest presented on the loan marketing materials. Using APR helps to more accurately express the true cost of the loan. California's usury statute restricts the amount of interest that can be levied on any loan by a non-exempt lender to what annual interest rate? A. the federal funds rate B. ten percent rate C. the monthly national average credit card rate D. the U.S. Treasury bond rate - Correct Answer Choice B The California Consumer Protection laws state clearly that rates above 10% APR are usurious, hence excessive, unreasonable, and punitive. A financial analysis of the future cash flows from an investment property can be found on A. a pro forma cash flow report. B. the financial statement, income statement. C. the financial statement, balance sheet. D. the financial statement, statement of cash flows - Correct Answer Choice A A pro forma cash flow report is a forecast of the future, not a reporting of historical income and expense. "Pro forma" is Latin loosely meaning "per form." Predictions of future outcomes are expressed "in the form of" a cash flow statement. What does "simple" mean in the term "simple interest?" A. It does not take the time value of money into the equation. B. The time value of money is key to its understanding.

C. It is so simple that a child could calculate it. D. It involves bringing all future periodic earned interest to today's date or projecting all future periodic earned interest forward to a future date. - Correct Answer Choice A Simple interest is also known as the "face rate" or the "stated interest rate." The time value of money is not expressed in the term, hence it is "simple" or not complicated. An individual invests $1 million in a $4 million dollar bottling plant and secures a 10 - year, triple-net lease from a beverage company. Annual gross rents are $500,000 per year. Using the payback method, how long will it take for the individual to get the invested money back? A. eight years B. four years C. two years D. impossible to determine from the facts provided - Correct Answer Choice C The individual invested $1 million, not $4 million, in the bottling plant. Gross rents are $500,000 per year. $1 million divided by $500,000 equals two years. The arithmetic is $1,000,000 ÷ $500,000 = 2. A "seller's market" occurs when prices for real estate rise due to A. an increase in the Federal Reserve discount rate. B. a great quantity of real estate is for sale or rent. C. an increasing demand for real estate purchase or rent. D. recent college graduates prefer to move home to live with their parents. - Correct Answer Choice C This is standard microeconomics supply and demand analysis. The availability of real property in the short term is fixed (inelastic). The greater the demand, the higher the prices or rent. Conventional lenders look carefully at loan to value (LTV) ratios when considering the security for a new owner-occupied home loan. Other matters being equal, which of the following ratios would make a loan on an owner-occupied residential dwelling most attractive?

A. 1:1

B. 1.2:1

C. 0.8:1

D. it is impossible to determine from the facts provided - Correct Answer Choice C A ratio of 0.8:1 means 0.8 ÷ 1 = 1 would represent 0.8 (80%) of the purchase price is borrowed. The borrower is placing 20% of the loan value as equity in the property. The remaining 80% is borrowed from the lender. This 20% funds from the purchaser comforts the lender that the borrower has "skin in the game" and is less likely to walk away from the loan. Jessica has a $250,000 30 - year fully amortized loan at 4.25% secured by deed of trust. The loan was acquired to purchase her personal residence, where she has lived for 15 years. Jessica notices that interest rates on refinance loans have dropped to 2.85%. What should she do? A. nothing because interest rates do not concern her B. increase her monthly principal payment because an economic recession is coming C. consider refinancing the remaining principal balance with a 15 - year fully amortized loan to reduce her monthly payments D. impossible to determine from the facts provided - Correct Answer Choice C The mortgage holder will wish to research refinancing options. Refinancing the remaining 15 years on her mortgage at a significantly lower interest rate will result in lower monthly payments, less interest paid over the life of the loan, and she would still own the home free and clear as originally planned. The "4 C's" of qualifying for a real estate loan include all of the following EXCEPT A. collateral B. credit and capacity C. character D. capita - Correct Answer Choice C Character is a traditional term for personal honesty and integrity. Contemporary loan qualification looks to credit history as reflected in the borrowers FICO score as an alternative assessment of character.

Of the following institutional lenders, which has the greatest money available to lend for real estate-secured loans? A. general-purpose banks B. mutual savings banks C. life insurance companies D. credit unions - Correct Answer Choice C Life insurance companies have by far the greatest assets available for real estate loans both on the primary and secondary loan markets. They are major lenders in both the commercial and residential property markets. Life insurance companies have more monies than general-purpose banks and mutual savings banks combined. Government-backed loans such as the Federal Housing Administration (FHA), U.S. Department of Housing and Urban Affairs (HUD), and U.S. Veterans Affairs (VA) A. lend millions of dollars to home borrowers each year. B. have competitive interest rates. C. insure and guarantee loans. D. provide funding directly from the federal government to the borrower. - Correct Answer Choice C This is exactly what FHA, HUD, and VA do. The FHA and HUD insure government-backed loans in their areas of interest. The VA guarantees loans. Borrowers and properties must conform to government-backed agency guidelines in order for the loan to be insured. Note the loan term "conforming loan." A "4- 3 - 2 - 1 depth table" would indicate what percentage of the value of the property is located in the front part of the parcel. This would apply to which of the following? A. lake-front property in Lake Tahoe B. forest timber land high in the eastern Sierra Nevada range C. suburban track homes in Glendale D. condominium projects in Palm Springs - Correct Answer Choice A

The value of a lot along the shore of Lake Tahoe is greatest where it fronts the lake. Lake Tahoe property abutting the lake is often valued by the linear foot of lakeshore. In other words, 100% of the value is in the linear feet touching the water. The mudsill is what part of conventional construction? A. the place you leave your shoes before entering the dwelling B. the plate upon which the structure rests C. the treated lumber or plate through which the building is bolted to the foundation D. the joist upon which the walls rest - Correct Answer Choice C The mudsill is where the house joins the foundation. In California, the land of earthquakes, it is important that the house is physically and firmly attached by bolts to the foundation. Otherwise, the structure may slip off the foundation, causing tremendous harm. An option agreement requires a minimum of how much value (money) to bind the contract? A. twenty percent of the proposed purchase price B. a nickel C. an amount equal in dollars to the buyer's FICO score D. one dollar - Correct Answer Choice B Yes, as little as this seems, five cents is the minimum amount required to bind the option contract. Regardless of the amount, it is advisable to take a check (rather than cash) because it is easier to document Transfer of real property between parties must legally describe the property and the parties to the transfer of title in which of the following ways? A. with two witnesses B. on paper C. with a handshake D. using common law - Correct Answer Choice B The statute of frauds clearly states that title to property can be transferred only in writing.