Arkansas Real Estate License Property Valuation and Financing 2

Question 1

A buyer purchases a home for $220,000 with a 10% down payment. The lender requires PMI because the LTV exceeds 80%. What is the loan amount?

Accepted Answer

$198,000

Answer

10% of $220,000 is $22,000 down, leaving a loan amount of $198,000.

Question 2

Which appraisal method is MOST appropriate for valuing a single-family home in a suburban neighborhood with many recent sales?

Accepted Answer

Sales comparison approach

Answer

The sales comparison approach is most reliable for residential properties when comparable sales data is available.

Question 3

In Arkansas, which type of loan is insured by the federal government and typically requires a minimum 3.5% down payment?

Accepted Answer

FHA loan

Answer

FHA loans are insured by the Federal Housing Administration and require as little as 3.5% down for qualifying borrowers.

Question 4

An appraiser adds $5,000 to a comparable sale because the subject property has a fireplace that the comparable lacks. This adjustment is called a:

Accepted Answer

Positive adjustment

Answer

A positive adjustment is added to the comparable's price when the subject has a feature the comparable lacks.

Question 5

What does the term 'amortization' refer to in real estate financing?

Accepted Answer

The gradual repayment of a loan through scheduled payments of principal and interest

Answer

Amortization is the systematic repayment of a mortgage loan through regular periodic payments covering both principal and interest.

Arkansas Real Estate License Practice Test