Champions Real Estate Finance Exam Questions and Answers 2024, Exams of Real Estate Management

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Champions Real Estate Finance Exam Questions and Answers 202 4

The minimum downpayment on a VA loan is: (a) 2% of the sales price (b) 0% of the sales price (c) 3.75% of the sales price (d) 1% of the sales price - Correct Answer-B _________ is the process of creating a new mortgage loan. (a) Origination (b) Funding (c) Underwriting (d) Servicing

• • Correct Answer-A A veteran can have more than one VA loan: (a) If the prior VA loan was paid in full and the property disposed of (b) The prior VA loan was assumed by an eligible veteran who substituted their entitlement (c) A or B (d) Under no circumstances - a VA loan is a "once in a lifetime" benefit
• • Correct Answer-C _________ are not-for-profit organizations that exist to serve their members. (a) Mortgage companies (b) Credit unions (c) Insurance companies

(d) One that cannot be financed - Correct Answer-B A qualifying ratio that compares the borrower's proposed house payment to their gross monthly income is the __________. (a) Back ratio (b) Appraisal ratio (c) Front ratio (d) Loan to value ratio - Correct Answer-C Periodic payment amounts such as principal & interest, estimated escrow, estimated monthly payment, and __________ must be disclosed in the Projected Payments section of the Loan Estimate form. (a) Mortgage Insurance (b) Homeowner's insurance (c) Property value (d) Estimated inspection cost - Correct Answer-A ___________ relates to Federal Government spending. (a) Monetary policy (b) Legislative policy (c) Reserve requirement (d) Fiscal policy - Correct Answer-D In the Closing Disclosure, prepaids include homeowner's and mortgage insurance premiums, prepaid interest, property taxes, and a maximum of __________ additional items. (a) 13 (b) 3 (c) 7 (d) 9 - Correct Answer-B

When calculating the monthly payment, the lender will add an amount equal to: (a) Twelve months insurance and six months taxes (b) 1/12 of the annual taxes and insurance (c) 1/12 of the annual loan amortization (d) An amount sufficient to create the escrow account - Correct Answer-B Which of the following is true regarding FHA loans? (a) An FHA loan requires a CRV (b) Ratios may be exceeded with compensating factors (c) FHA loans require a minimum 5% down payment (d) FHA loans are for low income borrowers only - Correct Answer-B The age of a property based upon the appraiser's assessment of the property's maintenance and upgrades is its __________. (a) Useful life (b) Market age (c) Chronological age (d) Effective age - Correct Answer-D In an ARM, the index: (a) Is controlled by the lender (b) Is controlled by the borrower (c) Varies with fluctuations in financial markets (d) Is chosen by the lender on the adjustment date - Correct Answer-C The loan to value ratio is: (a) The minimum down payment

(b) The percentage of value that a lender is willing to finance (c) Set by HUD on all loans (d) Based upon the assessed value of the property - Correct Answer-B An amortizing loan is: (a) A loan whose payment includes both principal and interest (b) A straight loan requiring interest only payments (c) A wraparound loan (d) A loan that includes both real and personal property - Correct Answer-A Escrow of taxes and insurance is required for FHA loans: (a) With a LTV of 90% or greater (b) Made to borrowers with a credit score under 600 (c) Always - all FHA loans require escrow of taxes and insurance (d) Unless the borrower agrees to pay an escrow waiver fee - Correct Answer-C A claim, lien, charge, or liability attached to and binding real property is a(n) __________. (a) Clause (b) Easement (c) Encumbrance (d) Conveyance - Correct Answer-C FHA requires a down payment of: (a) 0% (b) 3.50% (c) 5% (d) 5.50% - Correct Answer-B

The _________ is the central banking system of the United States. (a) Federal Deposit Insurance Company (b) The U.S. Treasury (c) The U.S. Mint (d) The Federal Reserve - Correct Answer-D The three major national credit reporting agencies are, Experian, Equifax and _________. (a) TransAtlantic (b) Union Pacific (c) Transtar (d) TransUnion - Correct Answer-D Because it is a gift, the lender and/or the agent can provide gift funds to the borrower to be used as a down payment on an FHA loan. (a) True (b) False - Correct Answer-B The two major purchasers of mortgages in the secondary market are: (a) Freddie Mac and Ginnie Mae (b) Fannie Mae and Freddie Mac (c) Ginne Mae and Fannie Mae (d) FHFA and HECM - Correct Answer-B If a borrower is in default, the mortgage servicer may start the _________ process. (a) Forestalling (b) Closing (c) Casting

(d) Foreclosure - Correct Answer-D A collateral-dependent loan is also known as a __________. (a) Title loan (b) Cash advance (c) Hard money loan (d) Payment option loan - Correct Answer-C Lenders bear less risk in making an FHA loan because the FHA: (a) Borrowers generally have higher than average income and credit (b) Requires a substantial down payment that minimizes risk (c) Is default insurance that will pay a claim to a lender in the event of default (d) Requires that the borrower have a higher credit score than other programs - Correct Answer-C While some expenses may be paid in the form of a seller contribution or other means, the borrower actually must have the funds on hand for the: (a) Downpayment (b) Appraisal fee (c) Points (d) Brokerage fee - Correct Answer-A FHA loans are available for: (a) Single family homes (b) Multifamily properties (c) Manufactured homes (d) All of the above - Correct Answer-D

An ARM that offers a fixed-rate period during the first years of the loan usually has an initial adjustment cap that is higher than the per adjustment cap. (a) True (b) False - Correct Answer-A _________ is defined as the sum of currency held by the public and transaction deposits at depository institutions. (a) M (b) M (c) M (d) MI- 5 - Correct Answer-A The _________ is where borrowers and mortgage lenders come together to create and negotiate the terms of a mortgage transaction. (a) Money market (b) Credit market (c) Primary market (d) Secondary market - Correct Answer-C A home was built 30 years ago, but is much like a home that is 10 years old, based upon its condition. In the appraisal, ten years is the home's ___________. (a) Useful life (b) Effective age (c) Chronological age (d) Depreciated age - Correct Answer-B The process of making a lending decision is known as ___________. (a) Processing (b) Applying

(c) Underwriting (d) Credit Scoring - Correct Answer-C In the Loan Estimate, the Comparisons Table: (a) Displays offers from multiple lenders (b) Provides information to the borrower used to compare loan offers from different lenders (c) Assists the borrower in comparing different loan offers from the same lender (d) Is not used until the borrower has committed to a particular lender - Correct Answer- B Ownership of real estate in Texas is established by certificates of title recorded in the Torrens System. (a) True (b) False - Correct Answer-B The money that mortgage companies use to make loans comes from _________. (a) The sale of bonds (b) The Federal Reserve (c) Tax dollars (d) Real estate - Correct Answer-A A lender is qualifying borrowers on a 36% ratio which includes house payment and regular monthly obligations. The borrower has a gross monthly income of $8,200 per month, and regular debt obligations totaling $1,375 per month. What is the maximum monthly payment for which this buyer will qualify? (a) $1, (b) $1, (c) $1, (d) $1,543 - Correct Answer-C

In a _________ foreclosure, the lender files suit with the judicial system. (a) Judicial (b) Power of sale (c) Deficiency judgment (d) Strict - Correct Answer-A The Upfront Mortgage Insurance Premium (UFMIP) on an FHA loan is paid: (a) At closing (b) By the seller (c) In monthly installments added to the monthly payment (d) Only upon default - Correct Answer-A The most probable sale price of a property is known as: (a) Net Price (b) Market Value (c) Contract Price (d) Assessed Value - Correct Answer-B There are _________ Federal Home Loan Banks in the United States. (a) Twelve (b) Twenty four (c) Sixteen (d) Fifty - Correct Answer-A A(n) _________ is a right given by law to creditors to have debts paid out of the property of a defaulting debtor. (a) Lien (b) Interest

(c) Settlement (d) Foreclosure - Correct Answer-A _________ or re-amortizing a mortgage can reduce the borrower's monthly payment, making a default situation more manageable. (a) Forecasting (b) Recasting (c) Forebearance (d) Foreclosure - Correct Answer-B A portfolio loan is: (a) An FHA loan sold in the secondary market (b) A loan not sold into the secondary market, but retained by the lender (c) A conventional loan sold to Freddie Mac (d) A construction to permanent loan sold in the primary market - Correct Answer-B The value applied to a property for ad valorem tax purposes is the ___________. (a) Assessed value (b) Appraised value (c) Market value (d) Exchange value - Correct Answer-A An appraiser finds that, on average, rental homes in the area are selling for $166,900. Average rents are $1575 per month. The appraiser is appraising a home with a projected gross rent of $1,520 per month. What is the value of the home using the gross rent multiplier? (a) $166, (b) $145, (c) $161,

(d) $133,266 - Correct Answer-C The maximum loan to value ratio on an FHA loan is 90%. (a) True (b) False - Correct Answer-B A return that represents the money earned on an investment is called _________. (a) A Yield (b) A Stop (c) A Buffer (d) Liquidity - Correct Answer-A The State of Texas plays a role in affordable housing through: (a) TALCB (b) TREC (c) TDHCA (d) TDEC - Correct Answer-C If the marketing time in an appraisal is over six months, (a) It is not an issue because time is not a factor in valuation (b) It indicates a healthy market that is boosting property values (c) It suggests that the area is fully developed (d) It suggests that the market is slow enough to be a drag on property values - Correct Answer-D If a home was built 30 years ago, thirty years is the home's ___________. (a) Useful life (b) Effective age

(c) Chronological age (d) Depreciated age - Correct Answer-C An appropriate loan for a property in need of significant rehabilitation would be a(n): (a) Construction loan (b) Construction to permanent loan (c) Cash back to buyer loan (d) Permanent loan - Correct Answer-B Each consumer has three different credit scores from the three major credit reporting agencies because: (a) Some consumers use only one or two of the reporting agencies (b) Some consumers have locked their credit file (c) Not all creditors report to all of the agencies (d) Some of the credit reporting agencies are slow to update their records - Correct Answer-C At closing, none of the charges listed on the Loan Estimate can change. (a) True (b) False - Correct Answer-B Periodic payment amounts such as principal & interest, estimated escrow, estimated monthly payment, and ___________ must be disclosed in the Projected Payments section of the Loan Estimate form. (a) Mortgage insurance (b) Homeowner's insurance (c) Property value (d) Estimate inspection cost - Correct Answer-A The most common occurrences that can result in foreclosure include:

(a) Payment delinquency (b) Failure to maintain the mortgaged property (c) Failure to repay property taxes (d) All of the choices are correct - Correct Answer-D A strict foreclosure is one in which the ____________ files suit on the homeowner in default. (a) Seller (b) Lender (c) State government (d) Federal government - Correct Answer-B For the borrower planning to remain in his/her home in the long term, or the borrower who is adverse to risk, the best choice in a mortgage would probably be: (a) A reverse mortgage (b) An adjustable rate mortgage (c) An interest-only loan (d) A fixed-rate mortgage - Correct Answer-D The Closing Information section of the Closing Disclosure form includes the date issued, the disbursement and closing dates, the address or location of the property, the value, and the ____________ name and file number. (a) Listing agent's (b) Broker's (c) Buyer's (d) Settlement agent's - Correct Answer-D _________ was established in 1970 for the purpose of purchasing mortgages in the secondary market. (a) Fannie Mae

(b) Farmer Mac (c) Ginnie Mae (d) Freddie Mac - Correct Answer-D The fixed rate charged on an adjustable rate mortgage until the first adjustment date is known as the ___________. (a) Prime rate (b) Index rate (c) Initial rate (d) Cap rate - Correct Answer-C The lender may also be referred to as the ___________ in some deed of trust forms. (a) Mortgagor (b) Grantor (c) Mortgagee (d) Trustee - Correct Answer-C Which loan is most likely to contain a release clause? - Correct Answer-A blanket loan A VA loan is allowed to be given to whom? - Correct Answer-Any veteran and their spouse A young couple with a good credit score want to buy a house in a high risk neighborhood and the lender doesn't want to approve it? This is a case of? - Correct Answer-Red lining for community The _____ mortgage market is made up of the businesses that lend to borrowers for the pur- chase of real estate. - Correct Answer-Primary Under a(n) _____, when the final payment is made to the seller, title transfers to the buyer. - Correct Answer- Which can FHA borrower not use gift funds from a(n) _____ as funds for a downpayment.

Parent Friend Seller Cash-out refinance - Correct Answer-Seller

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