Real Estate License Financing 5

Question 1

A bridge loan is typically used to:

Accepted Answer

Cover the gap between buying a new home and selling the old one

Answer

A bridge loan provides short-term financing until the borrower's existing property sells.

Question 2

If a borrower defaults, the legal process by which a lender forces sale of the property is:

Accepted Answer

Foreclosure

Answer

Foreclosure is the legal process allowing a lender to sell the secured property after default.

Question 3

The right of a defaulted borrower to reclaim property before a foreclosure sale is the:

Accepted Answer

Equitable right of redemption

Answer

The equitable right of redemption lets a borrower reclaim the property by paying the debt before the sale.

Question 4

A subordination clause in a mortgage:

Accepted Answer

Changes the lien's priority position

Answer

A subordination clause allows a lien to take a lower priority than a later loan.

Question 5

Which loan feature protects an ARM borrower by limiting how much the rate can rise?

Accepted Answer

Interest rate cap

Answer

An interest rate cap limits how much an ARM's rate can increase per adjustment or over the loan's life.

Real Estate License Practice Test