Free CA Real Estate Financing Questions and Answers — Questions and Answers
Question 1: A type of mortgage in which the lender makes periodic payments to the borrow, who is required to be age 62 or older in the FHA program, is called?
- Opposite
- Accelerate
- Reverse (Correct answer)
- Deficit
Correct answer: Reverse
A reverse mortgage is a specialized type of loan that allows homeowners, typically those aged 62 or older in the FHA program, to convert a portion of their home equity into cash. Instead of the borrower making payments to the lender, the lender makes periodic payments to the borrower. The loan balance grows over time and is typically repaid when the last borrower moves out, sells the home, or passes away.
Question 2: A conventional mortgage is a?
- Amortizing
- Guaranteed by the FHA
- Not guaranteed by any government agency (Correct answer)
- Approved by the VA
Correct answer: Not guaranteed by any government agency
A conventional mortgage is a type of home loan that is not insured or guaranteed by any government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). These loans are typically offered by private lenders and often require a higher credit score and down payment compared to government-backed loans. They are the most common type of mortgage.
Question 3: A chattel mortgage is usually given in connection with?
- Realty
- Farms
- Personal Property (Correct answer)
- Commercial Property
Correct answer: Personal Property
A chattel mortgage is a type of mortgage that is usually given in connection with personal property, rather than real estate. 'Chattel' is a legal term for movable property, such as vehicles, equipment, or inventory. This type of mortgage allows a borrower to use personal property as collateral for a loan, granting the lender a security interest in that specific movable asset.
Question 4: The lending of money at a rate of interest above the legal rate is?
- Speculation
- Usury (Correct answer)
- Both and B
- Neither A nor B
Correct answer: Usury
Usury is the illegal act of lending money at an interest rate that is excessively high or above the maximum legal rate permitted by state law. Usury laws are designed to protect borrowers from predatory lending practices and prevent lenders from charging exorbitant interest. Violations of usury laws can result in penalties for the lender, such as forfeiture of interest or even the principal.
Question 5: One discount point is equal to
- 1% of the sales price
- 1% of the interest sale
- 1% of the loan amount (Correct answer)
- None of the above
Correct answer: 1% of the loan amount
A discount point is a fee paid to the lender at the time of closing, typically by the borrower, to reduce the interest rate on a mortgage loan. One discount point is equal to 1% of the loan amount. For example, on a $200,000 loan, one discount point would cost $2,000. Paying points can lower the monthly mortgage payments over the life of the loan.
Free CA Real Estate Financing Questions and Answers
A type of mortgage in which the lender makes periodic payments to the borrow, who is required to be age 62 or older in the FHA program, is called?