Wisconsin Real Estate License Property Valuation and Financing 3

Question 1

A mortgage in which each payment covers both principal and interest, fully repaying the loan by the end, is called:

Accepted Answer

An amortized loan

Answer

An amortized loan pays off both principal and interest gradually so the balance is zero at maturity.

Question 2

In a mortgage, which party is the borrower who pledges the property as security?

Accepted Answer

Mortgagor

Answer

The mortgagor is the borrower who gives the mortgage as security to the lender (mortgagee).

Question 3

What type of loan has an interest rate that changes periodically based on an index?

Accepted Answer

Adjustable-rate mortgage

Answer

An adjustable-rate mortgage (ARM) has a rate that adjusts periodically according to a market index.

Question 4

A clause allowing the lender to demand full payment if the property is sold is known as a:

Accepted Answer

Due-on-sale (alienation) clause

Answer

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

Question 5

Which government-backed loan program requires no down payment for eligible veterans?

Accepted Answer

VA loan

Answer

VA loans guaranteed by the Department of Veterans Affairs allow eligible veterans to buy with no down payment.

Wisconsin Real Estate License Practice Test