CA Real Estate Finance Course » 2021 » Sec 14 Unit 1 Exam

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Question #1
Which definition best describes a package mortgage?
A.   It may be a first mortgage, a junior mortgage, or a junior wrap-around mortgage.
B.   The funds are often used for home renovations or to fund a college education.
C.   This might be used in the case of a furnished condominium.
D.   The lender is loaning on land, air, and a promise to build.
Question #2
Which of the following is a potential disadvantage for a buyer who enters into a lease with an option to buy contract?
A.   The buyer/lessee has to wait until the property owner is ready to sell the property before he can take possession of it.
B.   The buyer/lessee is unlikely to qualify for a regular mortgage if he decides to move or buy another property later.
C.   The buyer/lessee could lose any funds credited to the purchase price if he breaches the lease's terms.
D.   The buyer/lessee has to pay higher federal capital gains taxes if purchasing a property through a lease with an option to buy transaction.
Question #3
Which type of loan is insured by the Federal Housing Administration?
A.   Rural development
B.   Government
C.   Conventional
D.   Home equity line of credit
Question #4
Which statement is true regarding most government loans?
A.   Private mortgage insurance (PMI) is required.
B.   They're insured or guaranteed by the government.
C.   The government provides the funds.
D.   Borrowers must put at least 20% down.
Question #5
In the lending world, what does RAM stand for?
A.   Retired American mortgage
B.   Renewed annual mortgage
C.   Reverse annual mortgage
D.   Reverse annuity mortgage
Question #6
A loan with borrow options that can be long term with periodic adjustments or short term with more frequent adjustments to the rate is a(n) ______ mortgage.
A.   Adjustable rate
B.   Growing equity
C.   Renegotiable rate
D.   Fixed rate
Question #7
Janice is extremely excited to have purchased her first home. She was able to lock in her monthly payment at a very low rate for the first five years. In year six, Janice’s payments will become significantly larger based on the going market rates. What type of loan does Janice have?
A.   Adjustable rate mortgage
B.   Purchase money mortgage
C.   A straight-term loan
D.   Wrap-around mortgage
Question #8
Which of these statements best describes a purchase money mortgage?
A.   The funds are often used for home renovations or to fund a college education.
B.   The lender is loaning on land, air, and a promise to build.
C.   It may be a first mortgage, a junior mortgage, or a junior wrap-around mortgage.
D.   The lender makes payments to the homeowner for a certain period of time and gains corresponding ownership.

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