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.   The lender is loaning on land, air, and a promise to build.
B.   This might be used in the case of a furnished condominium.
C.   It may be a first mortgage, a junior mortgage, or a junior wrap-around mortgage.
D.   The funds are often used for home renovations or to fund a college education.
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 is unlikely to qualify for a regular mortgage if he decides to move or buy another property later.
B.   The buyer/lessee could lose any funds credited to the purchase price if he breaches the lease's terms.
C.   The buyer/lessee has to wait until the property owner is ready to sell the property before he can take possession of it.
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.   Conventional
C.   Home equity line of credit
D.   Government
Question #4
Which statement is true regarding most government loans?
A.   Borrowers must put at least 20% down.
B.   Private mortgage insurance (PMI) is required.
C.   They're insured or guaranteed by the government.
D.   The government provides the funds.
Question #5
In the lending world, what does RAM stand for?
A.   Reverse annuity mortgage
B.   Reverse annual mortgage
C.   Retired American mortgage
D.   Renewed annual 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.   Fixed rate
B.   Growing equity
C.   Renegotiable rate
D.   Adjustable 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.   Wrap-around mortgage
C.   A straight-term loan
D.   Purchase money mortgage
Question #8
Which of these statements best describes a purchase money mortgage?
A.   It may be a first mortgage, a junior mortgage, or a junior wrap-around mortgage.
B.   The lender is loaning on land, air, and a promise to build.
C.   The lender makes payments to the homeowner for a certain period of time and gains corresponding ownership.
D.   The funds are often used for home renovations or to fund a college education.

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