Real Estate License Financing 2

Question 1

Which clause in a mortgage allows the lender to demand full repayment if the borrower sells the property?

Accepted Answer

Due-on-sale clause

Answer

A due-on-sale (alienation) clause lets the lender call the loan due when the property is transferred.

Question 2

What does PITI stand for in a monthly mortgage payment?

Accepted Answer

Principal, Interest, Taxes, Insurance

Answer

PITI is the sum of principal, interest, property taxes, and homeowner's insurance.

Question 3

A loan that requires a large lump-sum payment at the end of the term is called a:

Accepted Answer

Balloon loan

Answer

A balloon loan has small periodic payments with a large final balloon payment.

Question 4

The federal law requiring lenders to disclose the true cost of credit, including APR, is:

Accepted Answer

Truth in Lending Act (Regulation Z)

Answer

The Truth in Lending Act, implemented by Regulation Z, mandates APR and finance-charge disclosure.

Question 5

In a buydown, what is reduced for the borrower?

Accepted Answer

The interest rate

Answer

A buydown pays points upfront to lower the borrower's interest rate, often temporarily.

Real Estate License Practice Test