Real Estate License Practice Test Financing

Question 1

Usury roughly means:

Accepted Answer

Illegal rates of interest

Answer

Usury refers to the practice of lending money at excessively high or illegal rates of interest. State laws often set limits on the maximum interest rate that can be charged on loans, and any rate above this legal limit is considered usurious.

Question 2

VA loan may be approved for the purchase of a one- to four-family home property if:

Accepted Answer

The veteran agrees to stay.

Answer

A key requirement for a VA loan on a one-to-four family home is that the veteran intends to occupy one of the units as their primary residence. This owner-occupancy requirement is fundamental to the VA loan program, which aims to help veterans secure housing for themselves.

Question 3

What is a promissory note?

Accepted Answer

is the major proof of a debt.

Answer

A promissory note is a written promise by a borrower to repay a specific sum of money to a lender under specified terms. It serves as the primary legal evidence of the debt and outlines the repayment schedule, interest rate, and other conditions of the loan.

Question 4

When is an appraiser least worried about the state's economy?

Accepted Answer

When appraising a medical building

Answer

Medical buildings, especially those serving essential healthcare needs, tend to be less affected by short-term economic fluctuations compared to retail businesses or residential homes. Healthcare demand is generally more stable, making medical properties more resilient during economic downturns and thus less sensitive to the state's economy.

Question 5

If you finance a home with a long-term loan and make equal monthly payments, the amount of each payment applied to the remaining principle balance will be as follows:

Accepted Answer

Increases as the interest payment falls

Answer

In a long-term, equal monthly payment (amortized) loan, the initial payments are heavily weighted towards interest. As the loan matures, the outstanding principal balance decreases, meaning less interest accrues each month. Consequently, a larger portion of each fixed payment is then applied to reduce the principal balance.