Real Estate Investing Real Estate Investing Real Estate Financing Methods Questions and Answers 2

Question 1

Which financing method allows a buyer to assume the seller's existing mortgage terms instead of obtaining a new loan?

Accepted Answer

Subject-to financing

Answer

Hard money loan

Answer

Bridge loan

Answer

Mezzanine financing

Question 2

What is the primary advantage of seller financing for a real estate investor?

Accepted Answer

Bypassing traditional lender qualification requirements

Answer

Eliminating the need for a down payment entirely

Answer

Avoiding all closing costs

Answer

Guaranteeing a lower interest rate than banks offer

Question 3

In a blanket mortgage, what clause allows a borrower to sell individual parcels without triggering full loan repayment?

Accepted Answer

Partial release clause

Answer

Due-on-sale clause

Answer

Acceleration clause

Answer

Defeasance clause

Question 4

What distinguishes mezzanine financing from a traditional second mortgage in commercial real estate?

Accepted Answer

Mezzanine debt is secured by an ownership interest in the borrowing entity rather than the property itself

Answer

Mezzanine loans always carry lower interest rates

Answer

Mezzanine financing requires no collateral of any kind

Answer

Mezzanine debt must be repaid before the senior loan

Question 5

Which government-backed loan program is specifically designed for purchasing properties with up to four units where the buyer occupies one unit?

Accepted Answer

FHA loan

Answer

SBA 504 loan

Answer

USDA business loan

Answer

HUD 221(d)(4) loan

Question 6

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

Accepted Answer

60% to 75%

Answer

90% to 100%

Answer

80% to 95%

Answer

50% or less