Alabama Real Estate License Exam Flashcards

Alabama Real Estate License Exam Flashcards If the post-license course is not completed within ___ year(s), the Temporary License lapses. This period begins on the FIRST DAY of the month AFTER passing the state exam.1 After passing state exam, you have ___ days to apply for a Temporary License, either on an Active or Inactive basis.90 Reverse-Annuity Mortgage (RAM)Payments are made to the BORROWER by the LENDER.Interest rate is fixed. Aimed at the elderly.Property is sold after death.Private Land Use Controls-Deed Restrictions-Subdivision Covenants (CC&R's) After passing State Exam, candidate can apply for a Temporary License and pay a fee of $___.$150.Discount RateWhen member banks borrow money from the Fed, the discount rate is the interest rate the Fed charges the member banks.Bargain and Sale DeedContains no express warranties against encumbrances.It implies that the grantor hold title and possession of the property.Grantee has little legal recourse if title defects appear later.Sometimes used in foreclosures and tax sales.Ginnie Mae (GNMA)-Created by the government when Fannie Mae became private.-It is a federal agency of HUD.-It purchases FHA and VA loans.Four pieces of determining whether something is real or

personal property:

-Intent-Method of Attachment-Adaptation for the Property-Agreement of Parties After completing the post-license course, candidate can apply for an Original License and pay a fee of $___.$85/year or $185/two years.Licensees pay $___ to the Recovery Fund at the time of application for an original license.$30 A ______ is personal property that has been attached, making it real property.Fixture A Lot and Block legal description is also called a _______, and is used in subdivisions.Recorded Plat Map (or just Plat).An office building is valued at $800,000 when the annual net income is capitalized at a rate of 20%. If the operating expenses and vacancy and rent loss total 40% of the gross income, what is the approximate gross annual income?$266,667The income approach to value is calculated as

follows:Annual net income divided by capitalization rate

equals value.Therefore, net income ÷ 0.2 $800,000.The net income is $800,000 × 0.2 = $160,000.The net income is 60% (100% 40%) of the gross income.The gross income is

$160,000 ÷ 0.6 = $266,667.

Property goes to the state if person dies intestate and no heirs are found.Escheat.

Recordation is not a legal requirement to transfer title, however if a title is to be recorded, it must first be acknowledged.True.Fannie Mae (FNMA)-Largest and oldest.-Started in 1938 to purchase FHA insured loans.-Today Fannie Mae purchases VA, FHA and conventional mortgages.A valid deed should contain all of the following: -Grantor's name and signature (which must be acknowledged).-Grantee's name.-Consideration.-Granting Clause (words of conveyance).-Habendum Clause (defines type of ownership taken by grantee).-Accurate Legal Description.-Any encumbrances, restrictions, etc.-Delivery and Acceptance by the grantee.Conditional Use PermitOwner wants a use for property that varies from zoning law but use is in best interest of the public (daycare center, school, country club, etc.) To qualify as a tax-deferred exchange, a property must be----held for productive use in trade or business.To defer the gain on the sale of an income-producing property, a tax-deferred exchange may be used.Open-End MortgageAllows for additional borrowing without rewriting the

mortgage or incurring additional costs.Example: Home

Equity Line of Credit TitleTitle is the (intangible) ownership of land and bundle of rights associated with ownership.Purchase Money MortgageA type of seller financing where the seller CONVEYS TITLE to a buyer and holds a mortgage as security.Seller "lends" the buyer money to purchase the property by agreeing to wait for cash to be paid over a period of time.A mortgage is given by the buyer (MORTGAGOR) to the seller (MORTGAGEE).The Primary Mortgage Market includes:-Savings and Loan Associations.-Mutual savings banks .-Commercial banks.-Insurance companies.-Mortgage bankers and brokers.-Credit unions.-Pension funds.-Rural Economic and Community Development (an agency of the Department of Agriculture).______ fixtures are fixtures that belong to the tenant, but are removed at the end of the lease.Trade Fixtures (salon chairs, etc.) FHA Qualifying Ratio29% / 41% AREC commissioners are appointed by the ___ with the advice and consent of the ___.Governor; Senate.An owner's mortgage includes a clause requiring a prepayment penalty. Three percent of any outstanding loan principal would be charged by the lender if the owner paid off the principal before the scheduled time. Payments were $296.88, due on the first of each month, and included both principal and interest in arrears at 8% per annum. After the

owner's July 1 payment, her loan balance was $8,946.23.On August 1, after handing her lender the check for her August 1 payment, the owner paid off the entire remaining loan balance. What is the approximate prepayment penalty?The monthly house payment, $296.88, includes both interest and principal. The prepayment penalty is charged only on the principal, not on interest. Therefore, one must determine how much the new principal loan balance willbe after the August 1st house payment is made. The

calculations are as follows:The loan balance after the July

• payment is $8,946.23 x 0.08 interest rate = $715.70 a

year ÷ 12 months = $59.64 interest for July.$296.88 monthly house payment $59.64 interest = 237.24 principal payment on August 1 payment.$8946.23 loan balance $237.24 principal paid in August leaves new principal balance of $8708.99 after August 1st payment.This is the amount on which the prepayment penalty will be

based:$8708.99 x 0.03 penalty = $261.27

AcknowledgementProof before an authorized official (notary public) that a person is who he/she say they are.A statement before an authorized official (notary public) that he/she signed a document of his/her own free will.

• section = 1 sq mile = ___ acres.1 section = 1 sq. mile = 640 acres.

Growing Equity Mortgage (GEM)Monthly payments increase annually, and increased amount is applied directly to the principal.Also known as a rapid-payoff mortgage.

Four Types of Deeds:-General Warranty Deed.-Special Warranty Deed.-Bargain

and Sale Deed.-Quitclaim Deed.Owner of property voluntarily transferring or conveying title by either making a gift or selling a property.Voluntary Alienation A broker other than the Qualifying Broker. Associate Broker Loan-to-Value Ratio (LTV)Loan Amount / Value of Property On February 1, a licensee with ABC Realty takes a 3month exclusive right-to-sell listing on a house. On March 1, the licensee moves out of state and inactivates his license.What happens to this listing?It remains a valid exclusive right-to-sell listing contract with ABC Realty.The listing belongs to the brokerage firm; it does not belong to an individual licensee. The licensee takes the listing on behalf of the firm, and, if the licensee leaves or becomes unlicensed during the listing, the listing would remain in whatever form it was originally taken. The listing would still be in effect with the firm until it expires or is terminated.General Warranty DeedProvides the greatest protection to the buyer; grantor is making certain promises/warranties.Protects past, present,

and future.These basic warranties are as follows:-Covenant

of seisin.-Covenant against encumbrances.-Covenant of quiet enjoyment .-Covenant of further assurance.-Covenant of warranty forever.Balloon Payment LoanPayments are PARTIALLY AMORTIZED. Entirety of remaining principal (and last month's interest) is paid at the end of the loan.A Company License must be obtained for each separate location or branch.True.Adjustable Rate Mortgage (ARM)Interest rate changes according to a standard index.Two

components of an ARM are:-Index-Margin (profit)

A person bought property from a seller and received a general warranty deed. Two years later, the seller's brother