PA Real Estate Exam Prep Questions Flashcards

PA Real Estate Exam Prep Questions Flashcards A state or local tax which is payable when title passes from one owner to another is called a A. title tax B. transfer tax

• revenue stamps D. real estate tariff
• State or local tax payable when title passes from one

owner to another is called a transfer tax.You decide you want to buy a boat and you want to borrow against the equity in your home. You would get a mortgage loan up to a specified amount which is in second position to your first mortgage. This arrangement is called a A.perfectly acceptable way to buy a boat B. leverage against your house C. home equity line of credit D. line of credit for personal purposes

• A mortgage loan, usually in second position, which

allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount, is known as a home equity line of credit.Which of the following best describes a "broker"? A.Someone who owns a real estate firm B. Some real estate agents working for brokers C. Someone who acts as an agent and brings two parties together for a transaction and earns a fee for this D. All of the above

• A broker can own a real estate firm, work for another

broker who owns the firm, broker loans in the mortgage industry, but basically is defined as anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee.When someone contributes to the construction or rehabilitation of a property with labor or services rather than cash, that contribution is called A. a personal contribution

• sweat equity C. a big help to the contractors D. toil and

labor

• Sweat equity is the contribution to the construction of or

rehabilitation of a property in the form of labor or services rather than cash.A home inspection is A. a thorough inspection by a professional which evaluates the structural and mechanical condition of a property B. not required by law C. often a contingency in a contract that it turns out satisfactorily D.both A and C

• A home inspection is a thorough inspection by a

professional that evaluates the structural and mechanical condition of the property. A satisfactory home inspection is often a contingency.Required for properties located in federally designated flood areas, this type of insurance compensates for physical property damage resulting from flooding. It is called A. water damage insurance B. hurricane insurance

• there's no such thing D. flood insurance
• Flood insurance is required in federally designated flood

areas and does compensate for physical property damage resulting from flooding.Which of the following does a survey not show? A. Precise legal boundaries of a property B. Location of improvements, easements, rights of way C.Encroachments D. Location of furnishings within the dwelling

• A survey is a drawing or map showing the precise legal

boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.A legal document conveying title to a property is called a/an

• sales contract B. option to purchase C. deed D. contract

for deed

• A deed is a legal document conveying title to property.

A female named in a will to administer an estate is called an A. executor B. executrix C. individual representative D.able inheritor

• The female executor named in a will to administer an

estate is called an executrix.

Why would a public auction take place? A. It's a good way to buy property B. To inform the public about property for sale C. To help auctioneers get employment D. To sell property to repay a mortgage in defaults

• A public auction is a meeting in an announced public

location to sell property to repay a mortgage that is in default.The person borrowing money in a mortgage agreement is called the A. mortgagor B. mortgagee C. borrower D.lessee

• The borrower in a mortgage agreement is called the

mortgagor.You are your sister are joint tenants in a home your mother left you. Your sister has three children in her will and you have one. If she dies first, who does the property go to? A.It is divided equally between her three children B. It goes entirely to you C. It is divided equally between her three children and your one D. It goes into her estate

• In the event of death in joint tenancy, the survivor owns

the property in its entirety.A record of an individual's repayment of debt, reviewed by mortgage lenders in determining credit risk is called a A.credit affidavit B. credit history C. there is no such record D.credit worthiness

• A record of an individual's repayment of debt is called a

credit history."Remaining term" refers to A. the remaining school term for a real estate class B. the original amortization term minus the number of payments that have been applied C. the months left in a pregnancy D. all of the above

• The remaining term applies to the original amortization

term minus the number of payments that have been applied.What does a power of attorney grant someone? A. The ability to attend law school B. Complete or limited authority on behalf of someone else C. Complete control over which medical facility someone uses D. The right to inherit an estate

Answer: B. A power of attorney derives power from a legal

document and grants someone complete or limited authority on behalf of someone.A government loan that is not a VA loan would be a/an A.FHA mortgage B. FDA mortgage C. This type loan does not exist D. ARM mortgage

• A mortgage which is insured by the Federal Housing

Administration (FHA) and is the other type of government loan besides a VA loan is an FHA mortgage.The most common type of bankruptcy is called A. Chapter 11 bankruptcy B. Chapter 11 no asset bankruptcy C.Chapter 7 no asset bankruptcy D. Chapter 7 bankruptcy

• The most common type for an individual is a "Chapter 7

No Asset" bankruptcy, which relieves the borrower of most types of debts.A person's financial obligations are known as his A.

payments B. assets C. liabilities D. credit risks Answer:

• A person's financial obligations are called liabilities and

include long-term A normal contingency in a real estate contract would be that the A. purchaser is able to obtain a satisfactory home inspection from a qualified inspector. B. seller is allowed to come back and spend 2 weeks in the house each year C.purchaser is able to have occupancy as soon as the sales contract is signed D. seller is allowed to dig up some of the landscaping and take it with him

• A normal contingency in a sales contract would be that

the purchaser is able to obtain a satisfactory home inspection from a qualified inspector. This condition has to be met before the contract is legally binding.What is meant by "seller carry-back"? A. The seller physically carries his furnishings out of the house on the day of closing B. The seller agrees to be on the mortgage with the buyer C. the seller provides financing, often in

combination with an assumable mortgage D. The seller carries the principal, but not the interest on a loan

• A seller carry-back is an agreement in which the owner

of a property provides financing, often in combination with an assumable mortgage.

Which best describes a "subdivision"?A. Houses in the same neighborhood similar in style and sizeB. A housing development created by dividing a tract of land into individual lotsC. A development which is "substandard"D.None of the above

• A subdivision consists of individual lots created from a

larger tract (subdivided) and are offered for sale or lease.Loans against 401K plans are A. not allowed for down payments on property B. an acceptable source of down payment for most types of loans C. too great a risk for most people to take D. only allowed if you're accumulated $50,000 in the plan

• Some administrators of 401(k)/403B plans allow for

loans against the monies you have accumulated in these plans. Loans against 401k plans are an acceptable source of down payment for most types of loans.A right-of-way which gives persons other than the owner access to or over a property is known as anA. easementB.ingressC. egressD. none of the above

• An easement is a right-of-way to persons other than the

owner and gives them legal access.If you buy a house and build cabinets into the wall, then sell that house, the cabinets stay because they have become a

• type of attachment B. fixture C. part of the house D.

none of the above

• Personal property becomes real property when attached

in a permanent manner to real estate and is called a fixture.Which of the following is not true of a "revolving debt"? A. It is a type of credit arrangement, like a credit card B. It revolves around no interest for the first six months C. A customer borrows against a pre-approved line of credit D.The customer is billed for the amount borrowed plus any interest due

• Revolving debt is a credit arrangement, such as a credit

card, which allows a customer to borrow against a pre-approved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.Which of the following is true of a lease-option? A. It is an alternative financing option B. Each month's rent may also consist of an additional amount applied toward the purchase C. The price is already set in the beginning D. All of the above

• A lease-option is an alternative financing option that

allows home buyers to lease a home with an option to buy.Each month's rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price.Which of the following describes the term "appreciation"?A.Kind words expressed to someone about something they didB. An increase in the value of propertyC. An item of value owned by an individualD. None of the above

• Appreciation is the increase in the value of a property

due to changes in market conditions, inflation, or other causes.Another term for the lender in a mortgage agreement is the

• banker B. mortgagee C. mortgagor D. private mortgage

company

• The mortgagee is the lender.

A schedule that shows how much of each payment will be applied to principal and how much toward interest over the life of the loan is called a/n A. amortization schedule B.annual percentage rate C. assumption D. both A and C

• An amortization schedule is a table showing how much

of each payment is applied to interest and how much to principal. It also shows the gradual decrease of the loan balance until it reaches zero.If a lender agrees to make a loan to a specific borrower on a specific property, he has made a A. decision to make the loan B. statement that both the buyer and the property pass inspection C. firm commitment D. both B and C

• A lender's agreement to make a loan to a specific

borrower on a specific property is called a firm commitment.What is the best description of a lien? A. Something that doesn't stand up straight in a house B. Something that's