FREE RES Finance Questions and Answers

Question 1

Which of the following best defines an amortized loan?

Accepted Answer

A loan that is paid off with a fixed payment schedule over time

Answer

A loan that requires interest-only payments

Answer

A loan with a variable interest rate

Answer

A loan that is paid off in a single lump sum at maturity

Question 2

What is the primary function of a mortgage lender in a real estate transaction?

Accepted Answer

To provide financing to the buyer for purchasing the property

Answer

To provide legal advice to the buyer

Answer

To set property tax rates

Answer

To appraise the property value

Question 3

Which of the following is a common type of mortgage where the interest rate remains the same for the entire term of the loan?

Accepted Answer

Fixed-rate mortgage

Answer

Adjustable-rate mortgage (ARM)

Answer

Balloon mortgage

Answer

Interest-only mortgage

Question 4

What is Private Mortgage Insurance (PMI) typically required for?

Accepted Answer

Loans with a down payment of less than 20%

Answer

Government-backed loans

Answer

All types of real estate loans

Answer

Loans with a high credit score

Question 5

In a real estate transaction, what is an "escrow account" used for?

Accepted Answer

To hold and manage funds for property taxes and insurance

Answer

To hold funds for future property improvements

Answer

To save money for the buyer’s down payment

Answer

To invest in real estate stocks