Real Estate and Mortgage Terms for Students Practice Test

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• Which statement correctly describes the relationship between a purchase agreement and a purchase contract and lists common contingencies?
• Which statement best describes when the income approach is typically used in appraisal?
• Which item is included in closing costs under insurance and escrow?
• Which statement best describes compensating factors in underwriting?
• Chapter 11 bankruptcy is typically available to?
• A quick exit is needed to stop ownership costs and move to a different investment. Which option is best?
• Which statement about cap rate is true?
• Which item is included in closing costs under legal and recording?
• Which item is commonly included in loan provisions?
• What does CRV stand for in VA loans?
• Estate in possession describes which of the following?
• Release of lien by the lender occurs when?
• What does title insurance do?
• What is the difference between an appraisal and a CMA, and when is each used?
• What is a hard money loan, and in what scenarios is it typically used?
• What is the document that transfers property ownership called?
• What is a Deed?
• What is a "right of rescission" in certain types of mortgage transactions, and when does it apply?
• In modified lien theory, title is invested in which party?
• Who typically pays the title insurance premium at closing?
• Which deed limits warranty to the time the seller actually owned the property?
• Which category includes recording fees?
• Which statement is true about traditional title policies?
• Which item is included in closing costs under the other category?
• What is the difference between an 'assignee' and an 'assignor' in real estate finance documents?
• What is the purpose of a title policy?
• Which statement best describes the Gross Rent Multiplier (GRM) when evaluating investment properties?
• What are the three primary appraisal approaches and when is each typically used?
• What distinguishes a final title policy from a title commitment?
• Define debt-to-income (DTI) ratio and the front-end and back-end limits used in underwriting.
• A balloon mortgage typically features which of the following?
• Which deed conveys property without seller warranties—'as is'?
• What is the difference between a tax lien and a mechanic's lien, and how are liens paid at closing?
• Which item is NOT listed as a consideration for investing in distressed properties?
• Encumbrance is defined as?
• What is the basic difference between homeowners insurance and lender-required mortgage insurance?
• A promissory note is:
• To realize cash flow from rent while maintaining ownership, which strategy should you choose?
• Which term describes the party who receives title in a deed?
• How are payments typically applied under loan provisions?
• Which of the following is NOT one of the five considerations for investing in distressed properties?
• What is environmental due diligence in real estate, and which hazards are commonly evaluated?
• How does depreciation affect real estate investors for tax purposes, and what typical recovery period applies to residential rental property?
• What does LTV stand for and how is it used in mortgage decisions related to PMI?
• Interest (real property) is defined as?
• In title theory of mortgages, who holds title until the loan is repaid?
• Which deed conveys whatever rights, interests, and title the grantor may have, but no warranty is made?
• In title theory, who holds the title during the loan?
• Which exit strategy aligns with generating ongoing rental income from a distressed property while avoiding sale?
• What can be mortgaged?
• In eminent domain, what must the government provide to property owners?
• What distinguishes a deed from a title?
• When the objective is to maximize proceeds from a quick exit and avoid ongoing ownership obligations, which exit strategy fits?
• Which item is typically included in mortgage covenants?
• What is the purpose of the Homeowners Insurance policy in a mortgage transaction?
• NOT a type of title assurance?
• Who is the grantee?
• Define gross rent multiplier (GRM) and provide the formula to calculate it.
• What is a lien?
• In a deed of trust arrangement, who holds legal title?
• Which of the following is a compensating factor example?
• What is the purpose of title assurance?
• What is the purpose of the Uniform Residential Appraisal Report (URAR) and what information does it typically include?
• Under RESPA, what is regulated?
• Which exit strategy is most appropriate for distressed property investing when the goal is to generate ongoing monthly cash flow?
• Which statement best describes an FHA-insured mortgage?
• Real estate refers to which of the following?
• A financing source that uses equity tied up in other owned real estate is:
• When can PMI be removed on a conventional loan?
• How are distressed properties typically identified?
• Which statement describes a VA-guaranteed mortgage?
• Which statement correctly describes the relationship between a promissory note and a mortgage or deed of trust?
• Which of the following is NOT answered by an abstract and opinion?
• A conventional mortgage is usually limited to what loan-to-value ratio?
• Which term describes the pledging of property as collateral for a loan?
• Which statement best describes title?
• Leasehold estate is defined as?
• Which term describes the link between a property owner and the property?
• Which statement accurately describes a reverse mortgage?
• If you intend to move into the distressed property and use it as your primary residence, which exit strategy applies?
• Which term describes a right or claim on real property, its revenue or production?
• Which is a reason a seller may personally finance a sale?
• Estate not in possession describes which of the following?
• Two general classifications of estates?
• What does PITI stand for, and which items are typically included in a standard monthly mortgage payment?
• If your plan is to reside in the home for retirement rather than selling, which exit is appropriate?
• Insured conventional mortgage increases the cap to what range?
• What is the purpose of an escrow analysis and when is it performed?
• What does LTV measure, and how does CLTV extend that measurement?
• Define APR and explain how it differs from the note interest rate?
• Which funds are typically held in an escrow account in mortgage financing?
• To start generating regular rental income from a distressed property, which strategy should be pursued?
• If the plan is to relocate and live in the distressed home as your primary residence, which exit strategy is appropriate?
• Chapter 7 bankruptcy involves?
• Which strategy is most suitable for a quick, liquid exit from a distressed property?
• In a real estate transaction, which item is typically considered part of real property?
• TRID stands for what in mortgage disclosures?
• What does occupancy status mean in loan underwriting, and how does it affect terms?
• What is a fixed-rate mortgage, and how does it compare to an adjustable-rate mortgage (ARM)?
• Escrow accounts fund payments for which items?
• What is the difference between residential and commercial mortgage underwriting, and how do criteria differ?
• Which term is the right to use land for a special purpose?
• Mortgage default occurs when?
• Underwriting: which item is included in the estimated housing expenses component?
• In housing considerations, which factor is a housing supply consideration?
• Which deed states the title is free and clear of encumbrances?
• What does a loan commitment letter indicate?
• Define price vs cost in real estate transactions.
• Outlays of cash required in distressed property investing include which costs?
• Notice of default and the acceleration clause means?
• Non-recourse clause in a loan agreement means?
• The underwriting process includes five steps. Which is the fifth step?
• An owner's title policy insures the interests of whom?
• What describes Chapter 13 bankruptcy?
• If you plan to move into the distressed home and establish residence, which option applies?
• What is typical reverse mortgage eligibility?
• What is the Certificate of Reasonable Value (CRV) used for?
• What is net operating income (NOI) and how is it calculated for an investment property?
• Which statements describe the Fair Housing Act protections and illegal advertising in real estate?
• Technical default occurs when?
• What is the difference between a monthly mortgage payment and amortization, and how does interest front-loading affect early payments?
• When can PMI typically be removed?
• What is an estate?
• Which term describes an estate that lasts for an indefinite period and has no specified end date?
• Freehold estate is defined as?
• In commercial real estate underwriting, what does NOI stand for and why is it important?
• What is the role of property taxes in a mortgage payment, and how are they typically estimated for escrow?
• A land contract typically provides that the seller conveys title when the contract obligations are fully met. How is title typically handled?
• Which is a financing source for distressed property investing?
• What is eminent domain?
• What makes a title unmarketable?
• Which of the following is an example of a workout option to avoid foreclosure?
• Which statement differentiates voluntary liens from involuntary liens?
• Lender's title policy insures the interest of whom?
• Which option is included in closing costs — other?
• What is private mortgage insurance (PMI), and when is it typically required?
• In lien theory of mortgages, foreclosure is typically what?
• Which term describes an estate with an end date for use?
• In a 'subject to' real estate transaction, who remains liable for the existing loan?
• What is a contingency in a real estate contract, and what is an example of a financing contingency?
• In a loan assumption, what happens?
• If you want to occupy the home now but expect to relocate later, which is the appropriate exit?
• Which statement accurately describes foreclosure under a mortgage versus a deed of trust?
• NOT a type of title assurance?
• Which statement best describes balloon mortgage use?
• What is the purpose of an abstract and opinion?
• Which item is included in the estimated housing expenses category?
• Who typically performs a CMA?
• Easement is defined as?
• Release fees are closing costs associated with which action?
• In a deed of trust, who holds title and who can foreclose non-judicially?
• Explain the concept of a title commitment and what it typically includes.
• Which is an example of a workout option to avoid foreclosure?
• If fixtures are not excluded in the sale terms, they become part of real property. Which statement reflects this?
• Define and differentiate between "firm" and "conditional" loan commitments.
• Which questions are answered by an abstract and opinion?
• What is lead-based paint disclosure, and when does it apply?
• When immediate liquidity is required to fund another investment, which exit strategy should you pursue?
• Which of the following statements best describes what is typically included in a monthly mortgage payment?
• Which loan type is typically exempt from the right of rescission?
• What is the effect of depreciation on taxes for real estate investors?
• A mortgage instrument secures a promissory note by pledging what?
• Future advances in a loan provision refer to?
• For an investor aiming to monetize immediately by exiting the investment, which is the best approach?
• In a general warranty deed, the seller warrants the title against what?
• Which strategy is suitable when you want to monetize the property via rental income rather than selling?
• In a standard mortgage payment, which item may be included if applicable beyond the core four components?
• Which term describes the process of reducing loan principal over the life of a loan?
• Which document serves as evidence that debt exists between a borrower and a lender?
• Which statement about lead-based paint risk assessment is correct?
• What are the two common pathways to remove PMI on a conventional loan?
• What is a CMA and what are its limitations?
• Which financing option involves using equity in other real estate?
• What documents evidence title ownership or protect against defects?
• Default is defined as?
• A mortgage instrument is defined as:
• Who typically conducts the search of the title record to prepare the abstract and opinion?
• Who is the grantor in a deed?
• Under TRID disclosures, which are standardized?
• Which item is included in closing costs under the other category?