CMA Property Valuation and Appraisal 1

Question 1

Which appraisal approach estimates value by comparing the subject property to recently sold similar properties?

Accepted Answer

Sales comparison approach

Answer

The sales comparison approach values a property by analyzing recent sales of comparable properties and adjusting for differences.

Question 2

What is the primary purpose of an appraisal in a mortgage transaction?

Accepted Answer

To establish collateral value for the lender

Answer

Lenders require an appraisal to confirm the property's market value is sufficient to secure the loan as collateral.

Question 3

What does the term 'loan-to-value ratio' (LTV) represent in mortgage lending?

Accepted Answer

The loan amount divided by the appraised property value

Answer

LTV is calculated by dividing the loan amount by the appraised or purchase price (whichever is lower), expressed as a percentage.

Question 4

Which federal agency publishes conforming loan limits that affect property valuation thresholds?

Accepted Answer

FHFA

Answer

The Federal Housing Finance Agency (FHFA) sets annual conforming loan limits for Fannie Mae and Freddie Mac.

Question 5

What is a 'drive-by' or exterior-only appraisal?

Accepted Answer

An appraisal where the appraiser only inspects the exterior of the property

Answer

A drive-by appraisal involves the appraiser inspecting only the exterior of the property without entering the home.

(CMA) Certified Mortgage Advisor Practice Test