PSI Real Estate Financing 5

Question 1

A seller finances the buyer's purchase directly by accepting a note and mortgage instead of full cash payment. This is called a:

Accepted Answer

Purchase money mortgage

Answer

A purchase money mortgage is created when the seller extends credit to the buyer as part of the property sale transaction.

Question 2

Which type of mortgage uses one loan to finance multiple properties simultaneously?

Accepted Answer

Blanket mortgage

Answer

A blanket mortgage covers two or more parcels of real estate under a single loan, often used by developers.

Question 3

A VA loan guarantee benefit is available to eligible veterans and allows them to purchase a home with:

Accepted Answer

No down payment required

Answer

VA-guaranteed loans allow eligible veterans to purchase a home with no down payment and without private mortgage insurance.

Question 4

In a mortgage, which clause releases the lien on the property once the debt is fully paid?

Accepted Answer

Defeasance clause

Answer

The defeasance clause requires the lender to release the mortgage lien once the borrower has fully repaid the debt.

Question 5

Which loan type is typically used by investors to fund a quick property purchase before obtaining permanent financing?

Accepted Answer

Bridge loan

Answer

A bridge loan is a short-term loan that 'bridges' the gap between a property purchase and securing long-term financing.

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