Real Estate Investing FREE Real Estate Investing Real Estate Financing Strategies Questions and Answers 2

Question 1

Which financing strategy allows an investor to assume the seller's existing mortgage terms instead of obtaining a new loan?

Accepted Answer

Subject-to financing

Answer

Subject-to financing involves taking over the seller's existing mortgage payments while the loan remains in the seller's name.

Question 2

What is the primary advantage of using a DSCR loan for investment property financing?

Accepted Answer

Qualification is based on property cash flow rather than personal income

Answer

DSCR loans qualify borrowers based on the property's debt service coverage ratio, making personal income documentation unnecessary.

Question 3

In a wraparound mortgage, what happens to the original underlying loan?

Accepted Answer

It remains in place while the new loan wraps around it at a higher amount

Answer

A wraparound mortgage keeps the original loan in place while creating a new, larger loan that encompasses it, with the seller collecting the difference.

Question 4

What is the typical loan-to-value ratio range that most hard money lenders offer on investment properties?

Accepted Answer

60% to 75%

Answer

Hard money lenders typically offer 60% to 75% LTV to protect their investment since these loans carry higher risk and shorter terms.

Question 5

Which federal program allows investors to use tax-advantaged financing in designated low-income census tracts?

Accepted Answer

Opportunity Zone funds

Answer

Opportunity Zone funds provide capital gains tax benefits for investments made in designated low-income census tracts established by the 2017 Tax Cuts and Jobs Act.

Real Estate Investing Practice Test

Real Estate Investing Practice Test

Real Estate Investing FREE Real Estate Investing Real Estate Financing Strategies Questions and Answers 2