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.   It may be a first mortgage, a junior mortgage, or a junior wrap-around mortgage.
C.   This might be used in the case of a furnished condominium.
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 pay higher federal capital gains taxes if purchasing a property through a lease with an option to buy transaction.
D.   The buyer/lessee has to wait until the property owner is ready to sell the property before he can take possession of it.
Question #3
Which type of loan is insured by the Federal Housing Administration?
A.   Rural development
B.   Conventional
C.   Government
D.   Home equity line of credit
Question #4
Which statement is true regarding most government loans?
A.   They're insured or guaranteed by the government.
B.   Private mortgage insurance (PMI) is required.
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.   Reverse annual mortgage
B.   Renewed annual mortgage
C.   Reverse annuity mortgage
D.   Retired American 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.   Growing equity
B.   Renegotiable rate
C.   Adjustable 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.   Wrap-around mortgage
D.   A straight-term loan
Question #8
Which of these statements best describes a purchase money mortgage?
A.   The lender is loaning on land, air, and a promise to build.
B.   The lender makes payments to the homeowner for a certain period of time and gains corresponding ownership.
C.   The funds are often used for home renovations or to fund a college education.
D.   It may be a first mortgage, a junior mortgage, or a junior wrap-around mortgage.

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