Real Estate Sales Exam Financing and Mortgages 4

Question 1

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

Accepted Answer

A clause that makes the full loan balance due if the property is sold or transferred

Answer

A due-on-sale (alienation) clause requires the mortgage to be paid in full if the property is sold or title is transferred.

Question 2

The Equal Credit Opportunity Act (ECOA) prohibits lenders from discriminating based on all of the following EXCEPT:

Accepted Answer

Credit score

Answer

ECOA prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance — not credit score.

Question 3

A buyer assumes the seller's existing mortgage. Which statement is TRUE?

Accepted Answer

The buyer takes over the loan with its existing terms and rate

Answer

In a mortgage assumption, the buyer takes over the existing loan's terms, rate, and balance — subject to lender approval.

Question 4

What does 'subordination' mean in real estate financing?

Accepted Answer

A junior lien agreeing to remain in a lower priority position

Answer

Subordination means a lienholder agrees their lien will remain junior (lower priority) to another lien on the property.

Question 5

Which of the following best describes a 'construction-to-permanent' loan?

Accepted Answer

A short-term construction loan that automatically converts to a long-term mortgage

Answer

A construction-to-permanent loan funds the building phase and then converts to a standard mortgage once construction is complete.

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Financing and Mortgages 4