Finance Review Quiz: 11-15: Part 3

The FHA: Insure loans only
Which of the following is true regarding FHA loans? FHA requires their loans to have a first lien position.The property must be owner-occupied. No prepayment penalties are allowed on an FHA loan.
A program designed to allow homeowners to finance light repairs or permanent improvements to their homes is known as the: FHA Title 1 Program.
Which legislative bill provides for VA loan guarantees? GL Bill
The veteran borrower may pay for: Title insurance.Recording fees.Credit report fees.
Who may not pay for closing costs in a VA loan? Veteran borrower
The indemnity Obligation means that veterans must: Reimburse the U.S. government for any loss on the loan.
The maximum insurance amount that the VA will provide for the veteran’s home loan is called: Entitlement
How many days of continuous active service must a current active veteran have to be eligible for a VA loan? 181
The form that notifies a lender of a veteran’s eligibility for a VA loan is called the: Certificate of Eligibility
In a purchase money mortgage, the seller is called the: Mortgagee
Which type of clause could prevent a loan from being assumed? Due-on-sale clause
An alienation clause allows a lender to: Make the loan due and payable if the property is sold
In a Wraparound loan, the seller receives: The benefit of the existing low-interest rate loan.
A distinguishing feature of a land contract is that, until all the payments have been made on the contract, legal title to the property is retained by the: Seller
When a buyer makes payments into the escrow account, and the escrow agent pays the seller’s loan payments out of the account, it is called: A contract escrow
If a lender is estopped, it means the lender is: Legally prevented from doing something.
An agreement to keep open the right to purchase or sell property for a predetermined period of time is called: An option
Something of value given by the optionee to the optioner in return for a commitment to sell the property to the optionee at some time in the future is called: Consideration
A lease/option is used to: Keep a sale alive.Reduce the selling price over time.Provide income to the seller while awaiting the close of a sale.
The individual who conducts the loan application evaluation process is called: An underwriter
Conventional lenders consider a borrower’s income adequate for a loan if the proposed payment of principal, interest taxes, and insurance does not exceed: 28%
Stable monthly income: Is borrower’s gross employment income plus other income that is reliable and likely to endure.
An underwriter, when considering the stable income of a prospective borrower, will evaluate: The base income of the borrower (both husband and wife if married).Earnings from acceptable secondary sources
Secondary earnings take the form of: Interest on savings.Disability payments.Bonuses and commissions.
Income that can be expected to continue for a substantial period is called: Durable income
As a general rule, a borrower should have continuous employment for at least: 2 years
The difference between the market value of the property and the sum of selling expenses, mortgages and other liens against a property is referred to as: Equity
Liquid assets include: Any assets that can readily be converted to cash
Gift letters: Usually must be from an immediate family member
Qualifying the property involves: An analysis of the property’s features to determine its value to serve as collateral.Determining through analysis whether its value can be expected to remain stable over time.
In valuing a property, the most easily understood approach is called the: Market approach
The comparative property sales that appraisers actually use are: Those properties that have closed escrow
When comparing recent sales of like properties, the sale should be recent, within the past: 6 months
When the buyer and seller are both well informed, under no pressure to either buy or sell, and the property is offered for a reasonable time on the open market it is said to be: An arm’s length transaction
A permanent loss of value to a property caused from factors outside the property itself is known as: Economic obsolescence
In most cases, which type of obsolescence is curable? Functional.Physical.
A gross rent multiplier helps an appraiser to determine the: Income approach to a properties value
An opinion of value is called: An appraisal
Strictly enforced zoning and private restrictions Do much to promote conformity.Are a major consideration for appraisers.
To convert a fraction to a decimal you: Divide the top number of the fraction by the bottom number of the fraction
To convert a percentage to a decimal, you: Remove the percentage sign and move the decimal point two places to the left.
The cost of borrowing money is described as: Interest
Simple interest is paid: Only on the principal owed
The formula to calculate simple interest is: I = PxRxT
in six years, $3,500 earns $2,310 interest. What is the rate of interest? 11%
The nominal interest rate is the rate of interest: Stated in the loan documents
A proration is used to: Divide prepaid property expenses fairly between the listing and selling brokers.
Which of the following is not prorated during escrow? PMI
A table which indicates both the monthly payment needed to repay both the principal amount and the interest due is called: An amortization table
To be eligible to use the California Veteran Farm and Home Purchase Program, an individual must: Live in California.Be planning to live in California.
All of the following are true statements regarding the Cal-Vet loan program except: A veteran can only use the Cal-Vet program one time.
Mortgage insurance is required in a Cal-Vet loan if the down payment is less than: 20%
Cal-Vet loans are made for a term of: 35%
The last step in the loan process, usually when the loan proceeds are distributed and the deed is recorded, is generally handled by the: Escrow agent
Which of the following may act as a third party and perform the escrow function in a real estate transaction? Attorneys.Title companies.Independent escrow companies.
The document used in escrow that lists all the dollar amounts involved in a real estate transaction is the: Settlement statement
The Real Estate Settlement Procedures Act requires that the borrower be given: A good faith estimate.Any other disclosures required by state law.Any other disclosures required by federal law.
RESPA: Prohibits kickbacks and unearned
In California, which of the following disclosures must be given to a prospective purchaser in a real estate transaction? Real Estate Transfer Disclosure.Special Flood Area Disclosure.Disclosure of Geologic Hazards.

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