Arizona Real Estate License Real Estate Financing Concepts 3

Question 1

Which entity purchases mortgages on the secondary market to provide lenders with liquidity?

Accepted Answer

Fannie Mae

Answer

Fannie Mae buys loans on the secondary mortgage market, freeing up lender capital to make new loans.

Question 2

The FHA's primary role in real estate financing is to:

Accepted Answer

Insure loans made by approved lenders

Answer

The FHA insures loans, protecting lenders against loss, rather than lending money directly to borrowers.

Question 3

A key benefit of a VA loan for eligible veterans is:

Accepted Answer

Often no down payment required

Answer

VA loans allow eligible veterans to finance up to 100% of the value, often requiring no down payment.

Question 4

What is a 'discount point' on a mortgage loan?

Accepted Answer

A fee equal to 1% of the loan paid to lower the interest rate

Answer

One discount point equals 1% of the loan amount and is paid upfront to buy down the interest rate.

Question 5

In an adjustable-rate mortgage (ARM), the interest rate is calculated by adding a margin to what?

Accepted Answer

The index

Answer

An ARM's rate equals the index plus the lender's margin, so the rate moves as the index changes.

Arizona Real Estate License Practice Test