FREE Real Estate Sales Financing Options Questions and Answers

Question 1

Which financing option typically involves a lender providing funds to a borrower, secured by a mortgage on the property, with the borrower making regular principal and interest payments?

Accepted Answer

Conventional loan

Answer

Seller financing

Answer

Lease-option agreement

Answer

All-cash purchase

Question 2

A buyer is interested in purchasing a property but struggles to qualify for a traditional mortgage due to a low credit score. The seller, who owns the property outright, agrees to accept installment payments directly from the buyer over a period of time, retaining legal title until the full purchase price is paid. What type of financing arrangement is this?

Accepted Answer

Contract for deed (Land contract)

Answer

Bridge loan

Answer

Reverse mortgage

Answer

Construction loan

Question 3

Which of the following government-backed loan programs is designed to assist eligible veterans, service members, and surviving spouses in purchasing homes, often without requiring a down payment?

Accepted Answer

VA loan

Answer

FHA loan

Answer

USDA loan

Answer

Conventional conforming loan

Question 4

A buyer wants to purchase a property but needs to sell their current home first. They are concerned about making two mortgage payments. Which financing strategy might allow them to use the equity from their current home for the down payment on the new one, bridging the gap between sales?

Accepted Answer

Bridge loan

Answer

Wrap-around mortgage

Answer

Purchase-money mortgage

Answer

Assumption of mortgage

Question 5

Which of the following is a key characteristic of a fixed-rate mortgage?

Accepted Answer

The interest rate and monthly principal & interest payment remain constant for the life of the loan.

Answer

The interest rate adjusts periodically based on an index.

Answer

Payments typically increase over the life of the loan.

Answer

It is exclusively available for commercial properties.

Question 6

A seller agrees to take back a portion of the purchase price as a loan for the buyer, rather than the buyer obtaining all financing from a third-party lender. This arrangement is known as a:

Accepted Answer

Seller carry-back (or purchase-money mortgage)

Answer

Balloon payment loan

Answer

Reverse annuity mortgage

Answer

Blanket mortgage