Wisconsin Real Estate License Valuing and Financing Property Questions and Answers Flashcards
6 cards from real Wisconsin 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 6 Wisconsin Real Estate License Valuing and Financing Property Questions and Answers flashcards as text
A property generates $48,000 in annual net operating income and has a capitalization rate of 8%. What is the estimated property value using the income approach?
Answer: $600,000
Using the income approach formula, value equals net operating income divided by the cap rate: $48,000 ÷ 0.08 = $600,000.
Which federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a mortgage application?
Answer: TRID (TILA-RESPA Integrated Disclosure)
TRID rules under the combined TILA-RESPA framework require lenders to provide a Loan Estimate within three business days of receiving a loan application.
In the sales comparison approach, what adjustment is made when a comparable property has a feature that the subject property lacks?
Answer: The value of the feature is subtracted from the comparable's sale price
When a comparable has a superior feature the subject lacks, the value of that feature is subtracted from the comparable's sale price to make it equivalent to the subject.
What is the difference between reproduction cost and replacement cost in the cost approach to valuation?
Answer: Reproduction cost replicates the exact structure while replacement cost uses modern equivalents
Reproduction cost is the cost to build an exact replica of the structure using identical materials and methods, while replacement cost uses modern materials and techniques to build a structure of equal utility.
In Wisconsin, which type of mortgage clause allows the lender to demand full repayment if the property is sold or transferred?
Answer: Due-on-sale clause
A due-on-sale clause gives the lender the right to demand full loan repayment when the borrower sells or transfers the property.
What is an adjustable-rate mortgage (ARM) index, and how does it affect a Wisconsin borrower's interest rate?
Answer: A benchmark rate that, combined with the margin, determines the borrower's adjustable interest rate
An ARM index is a benchmark rate such as SOFR that, when added to the lender's margin, determines the borrower's adjusted interest rate at each reset period.