Arizona Real Estate License FREE Arizona Real Estate License Financing and Valuation Principles Questions and Answers 2

Question 1

In Arizona, what does the loan-to-value (LTV) ratio represent?

Accepted Answer

The ratio of the loan amount to the appraised value of the property

Answer

The ratio of the down payment to the purchase price

Answer

The ratio of monthly income to monthly mortgage payment

Answer

The ratio of total debt to total assets

Question 2

Which appraisal approach estimates value by calculating the cost to rebuild the structure minus depreciation plus land value?

Accepted Answer

Cost approach

Answer

Sales comparison approach

Answer

Income capitalization approach

Answer

Gross rent multiplier approach

Question 3

A borrower obtains an adjustable-rate mortgage (ARM) in Arizona; what component sets the baseline for rate adjustments?

Accepted Answer

The index

Answer

The discount rate

Answer

The margin

Answer

The cap

Question 4

What is the primary purpose of a deed of trust in Arizona real estate financing?

Accepted Answer

To serve as the security instrument that pledges the property as collateral for the loan

Answer

To transfer ownership from seller to buyer

Answer

To establish the interest rate and repayment terms

Answer

To record the property boundaries and legal description

Question 5

When using the income capitalization approach, how is the value of an investment property determined?

Accepted Answer

By dividing the net operating income by the capitalization rate

Answer

By comparing recent sales of similar properties

Answer

By multiplying the gross rent by a standard factor

Answer

By subtracting depreciation from the replacement cost

Question 6

Under Arizona law, what is the typical redemption period after a judicial foreclosure sale?

Accepted Answer

6 months

Answer

30 days

Answer

1 year

Answer

No redemption period exists