Real Estate Sales Exam Real Estate Sales Financing and Mortgages 1

Question 1

Which type of mortgage allows the interest rate to adjust periodically based on a financial index after an initial fixed-rate period?

Accepted Answer

Adjustable-rate mortgage (ARM)

Answer

Balloon mortgage

Answer

Fixed-rate mortgage

Answer

Reverse mortgage

Question 2

What is the term for the percentage of a property's appraised value that a lender is willing to finance?

Accepted Answer

Loan-to-value ratio (LTV)

Answer

Debt-to-income ratio

Answer

Capitalization rate

Answer

Points ratio

Question 3

Under a purchase-money mortgage, who acts as the lender?

Accepted Answer

The property seller

Answer

A commercial bank

Answer

The Federal Housing Administration

Answer

A mortgage broker

Question 4

What does 'buying down the rate' mean in mortgage financing?

Accepted Answer

Paying discount points upfront to obtain a lower interest rate

Answer

Negotiating a lower sales price to reduce the loan amount

Answer

Choosing an ARM over a fixed-rate loan

Answer

Refinancing at a lower rate after closing

Question 5

Which federal law requires lenders to provide borrowers with a Closing Disclosure at least three business days before consummation of a mortgage loan?

Accepted Answer

TILA-RESPA Integrated Disclosure (TRID) rule

Answer

Equal Credit Opportunity Act (ECOA)

Answer

Community Reinvestment Act (CRA)

Answer

Real Estate Settlement Procedures Act (RESPA) Section 8

Question 6

What is a 'due-on-sale' clause in a mortgage?

Accepted Answer

A clause allowing the lender to demand full repayment if the property is sold or transferred

Answer

A provision requiring the borrower to pay property taxes into escrow

Answer

A penalty charged when the borrower refinances within the first year

Answer

A requirement that the buyer purchase title insurance at closing