Real Estate Sales Exam Real Estate Sales Financing and Valuation Questions and Answers 2

Question 1

A buyer obtains an FHA loan with a 3.5% down payment on a $280,000 home. What is the approximate upfront mortgage insurance premium (UFMIP) at the current rate of 1.75%?

Accepted Answer

$4,732.50

Answer

The UFMIP is calculated on the base loan amount: $280,000 - $9,800 down = $270,200 x 1.75% = $4,728.50, closest to $4,732.50 accounting for standard rounding.

Question 2

In the income approach to valuation, a property generates $48,000 in annual net operating income and the capitalization rate is 6%. What is the estimated property value?

Accepted Answer

$800,000

Answer

Using the income capitalization formula: Value = NOI / Cap Rate = $48,000 / 0.06 = $800,000.

Question 3

Which clause in a mortgage allows the lender to demand full repayment if the borrower sells or transfers the property?

Accepted Answer

Due-on-sale clause

Answer

A due-on-sale (alienation) clause gives the lender the right to accelerate the loan balance upon transfer of ownership.

Question 4

A property sold for $350,000 and the comparable sale across the street had a pool valued at $15,000 that the subject property lacks. Using the sales comparison approach, what adjustment is made?

Accepted Answer

Subtract $15,000 from the comparable

Answer

In the sales comparison approach, adjustments are always made to the comparable; since the comp has a feature the subject lacks, you subtract from the comp.

Question 5

What does the loan-to-value (LTV) ratio represent in real estate financing?

Accepted Answer

The ratio of the mortgage amount to the property's appraised value or sale price, whichever is lower

Answer

LTV is calculated by dividing the mortgage loan amount by the lesser of the appraised value or the purchase price.

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Real Estate Sales Financing and Valuation Questions and Answers 2