Lesson 17 Quiz – Real Estate Finance

The clause in the mortgage that could allow the lender to require the borrower to repay the loan before the scheduled date is called

acceleration

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early payment

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demand

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discharge

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The underwriting process includes which of the following?

Appraising the value of personal property

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Determining the loan terms based on the location of the property

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Reviewing the borrower’s history of payment of loans or rent on previous properties

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Evaluating the borrower’s portfolio flaws

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Under the terms of the Equal Credit Opportunity Act, a lender may NOT do which of the following?

Ask applicants any question about their age, sex, religion, race, or national origin except as the law may require

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Require that borrowers disclose all income, debt, cash, and net worth

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Evaluate a loan applicant based on the applicant’s income and credit rating

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Require that a borrower demonstrate creditworthiness

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Which of the following is a ratio used by lenders to determine whether or not the borrower has adequate means to make the periodic payments?

Net worth ratio

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Demographic ratio

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Debt ratio

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Credit ratio

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Which of the following statements is true under the general terms of a contract for deed?

The seller retains the title, and the buyer receives possession and equitable title while making payments

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The buyer will receive the title to the property at the closing of the transaction

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The buyer will receive the title to the property and possession of the property at the closing of the transaction

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The seller will retain possession of the property until 50% of the loan amount is paid

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Julio just purchased a house for $650,000 with a $600,000 mortgage loan and $50,000 cash downpayment. Which of the following will Julio’s lender most likely require Julio purchase?

Points insurance

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Fannie Mae closing insurance

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Private mortgage insurance

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Appreciation insurance

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Which of the following is a pre-calculated, unchanging number that relates the principal and interest payment amount of a loan to the amount of the loan at a given interest rate and term?

A gross mortgage multiplier

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An interest ratio

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A private mortgage integral

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A loan constant

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Which of the following statements is true when describing a Federal Housing Administration (FHA) mortgage?

There are no specific regulations regarding appraisals

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If borrower defaults, FHA reimburses the lender for losses due to default by the borrower

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100% financing is available to borrowers

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There is no maximum length of the repayment period

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A junior loan is defined as a loan that

has a loan amount less than the senior loan

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is adjustable on an annual basis

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is subordinate to a senior or first mortgage loan

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was initiated subsequent to the primary mortgage

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A negative amortization loan

results in the borrower owing less at the end of the loan term than with a conventional loan.

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gives the borrower no flexibility in repaying the loan

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results in the borrower potentially owing more at the end of the loan term

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requires that the lender lessen the amount of the amortization on an annual basis

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