Financing and Valuation Principles Flashcards
7 cards from real Arizona Real Estate License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financing and Valuation Principles flashcards as text
The process of gradually paying off a loan through regular payments of principal and interest is called:
Answer: Amortization
Amortization spreads loan repayment over time through scheduled principal and interest payments.
When an adjacent smaller lot is worth more merged with a larger parcel, the increased value is called:
Answer: Plottage
Plottage is the added value created by combining adjacent parcels under one ownership (assemblage).
Which secondary market entity purchases mortgages from lenders to provide liquidity?
Answer: Fannie Mae
Fannie Mae buys mortgages in the secondary market, freeing lenders to make more loans.
A rental property rents for $2,000 per month and sold for $288,000. What is the gross rent multiplier (monthly)?
Answer: 144
Monthly GRM = price / monthly rent = $288,000 / $2,000 = 144.
The appraisal principle that a lower-value home gains value from surrounding higher-value homes is:
Answer: Progression
Progression holds that a modest property's value is boosted by more valuable neighboring properties.
A VA loan's key benefit for eligible veterans is:
Answer: No mortgage insurance and no down payment
VA loans are guaranteed by the Department of Veterans Affairs, often requiring no down payment and no monthly mortgage insurance.
Which clause in a mortgage allows the lender to declare the entire balance due after default?
Answer: Acceleration clause
The acceleration clause lets a lender demand the full outstanding balance upon borrower default.