Real Estate Financing MCQ Flashcards
7 cards from real PSI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Real Estate Financing MCQ flashcards as text
What is a 'conforming loan' in the context of conventional mortgage financing?
Answer: A loan that meets Fannie Mae or Freddie Mac's purchase criteria including loan limits
A conforming loan meets the underwriting standards and loan limits set by Fannie Mae and Freddie Mac, making it eligible for purchase on the secondary market.
Which of the following BEST describes a 'bridge loan' in real estate?
Answer: A short-term loan used to bridge the gap between buying a new home and selling the existing one
A bridge loan is short-term financing that allows a borrower to purchase a new property before their current property is sold.
A borrower has a gross monthly income of $5,000 and total monthly debt obligations of $1,900 including a proposed PITI of $1,200. What is the back-end debt-to-income ratio?
Answer: 38%
The back-end DTI divides total monthly debts ($1,900) by gross monthly income ($5,000) = 38%.
Under a VA loan, what is the purpose of the VA 'funding fee'?
Answer: It funds the VA loan guaranty program and allows veterans to obtain loans with no down payment
The VA funding fee is a one-time charge that helps sustain the VA loan program, allowing eligible veterans to obtain no-down-payment mortgages without ongoing mortgage insurance.
Which clause in a mortgage document gives the lender the right to declare the entire loan balance immediately due and payable if the borrower defaults?
Answer: Acceleration clause
The acceleration clause allows the lender to demand immediate full repayment of the remaining loan balance upon the borrower's default or other triggering event.
What is the maximum seller concession allowed on a conventional loan with less than 10% down payment?
Answer: 3% of the purchase price
Fannie Mae and Freddie Mac limit seller concessions to 3% of the purchase price when LTV exceeds 90% (less than 10% down).
What distinguishes a 'deed of trust' from a traditional mortgage as a security instrument?
Answer: A deed of trust involves three parties—borrower, lender, and trustee—while a mortgage involves only two
A deed of trust uses three parties: the trustor (borrower), beneficiary (lender), and a neutral trustee who holds title as security, allowing non-judicial foreclosure in most states.