Arkansas Real Estate License Arkansas Real Estate License Property Valuation and Financing Questions and Answers 2

Question 1

A buyer is purchasing a home in Little Rock for $210,000 with a 90% LTV conventional loan. What is the required down payment?

Accepted Answer

$21,000

Answer

A 90% LTV loan means the borrower finances 90% of the purchase price, so the down payment is 10% of $210,000 which equals $21,000.

Question 2

Under Arkansas law, which approach to value is most commonly used when appraising a single-family residence?

Accepted Answer

Sales comparison approach

Answer

The sales comparison approach uses recent sales of similar properties and is the most reliable method for appraising residential properties in Arkansas.

Question 3

An Arkansas property has an annual net operating income of $36,000 and the investor requires an 8% capitalization rate. What is the estimated value using the income approach?

Accepted Answer

$450,000

Answer

Value equals net operating income divided by the capitalization rate: $36,000 / 0.08 = $450,000.

Question 4

Which federal regulation requires lenders to provide a Loan Estimate within three business days of receiving a mortgage application?

Accepted Answer

TILA-RESPA Integrated Disclosure (TRID)

Answer

TRID rules require lenders to provide a Loan Estimate disclosing loan terms and estimated costs within three business days of application.

Question 5

A property in Fayetteville was purchased for $175,000 five years ago. The replacement cost of improvements is $200,000 with $30,000 in accrued depreciation and the land is valued at $50,000. What is the property value using the cost approach?

Accepted Answer

$220,000

Answer

The cost approach calculates value as replacement cost minus depreciation plus land value: $200,000 - $30,000 + $50,000 = $220,000.

Arkansas Real Estate License Practice Test

Arkansas Real Estate License Practice Test

Arkansas Real Estate License Arkansas Real Estate License Property Valuation and Financing Questions and Answers 2