Financing Flashcards
7 cards from real Real Estate License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financing flashcards as text
Which clause in a mortgage allows the lender to demand full repayment if the borrower sells the property?
Answer: Due-on-sale clause
A due-on-sale (alienation) clause lets the lender call the loan due when the property is transferred.
What does PITI stand for in a monthly mortgage payment?
Answer: Principal, Interest, Taxes, Insurance
PITI is the sum of principal, interest, property taxes, and homeowner's insurance.
A loan that requires a large lump-sum payment at the end of the term is called a:
Answer: Balloon loan
A balloon loan has small periodic payments with a large final balloon payment.
The federal law requiring lenders to disclose the true cost of credit, including APR, is:
Answer: Truth in Lending Act (Regulation Z)
The Truth in Lending Act, implemented by Regulation Z, mandates APR and finance-charge disclosure.
In a buydown, what is reduced for the borrower?
Answer: The interest rate
A buydown pays points upfront to lower the borrower's interest rate, often temporarily.
Which type of loan adjusts the interest rate periodically based on an index?
Answer: Adjustable-rate mortgage (ARM)
An ARM's rate changes over time as the underlying index moves, within set caps.
Private mortgage insurance (PMI) is typically required when the down payment is less than:
Answer: 20%
Lenders require PMI on conventional loans when the borrower puts down under 20%.