Texas Real Estate Exam 2 Flashcards

Texas Real Estate Exam 2 Flashcards Compound interestInitial deposit (1 + interest rate) ^n What is one major difference between residential and commercial leases?Residential leases are typically shorter than commercial leases Add on interest (ADI)Loan amount x interest rate x number of payments (LA x IR x N) What approach collects property information and then uses the principle of substitution to determine the property's value?Sales comparison approach Annual Percentage Rate (APR)2 x # of payments in one year x total financing charges / (number of scheduled payments + 1) Which kind of lease has no time limit?Estate at will What does abbreviation REO stands for?Real estate owned properties What are the FHA loan guidelines for income and debt ratio?Income needs to be under 31%, and debt needs to be under 43%.Which of the following is classified as community property?Property acquired by one spouse during a marriage Property valueLoan amount / LTV Percentage of profitProfit / original cost What is the standard term for a management contract?No standard; varies by contract Which of the following must be prorated or divided proportionately between the buyer and the seller?Taxes, insurance, utilities, all of the above A person who makes a will is called aTestator or testatrix Most conventional loans require borrower to make a down

payment of:

20% or more Minimum bid, absolute, and reserve are the three types ofReal estate auctions The ___ is based on the idea that money available at the present time is worth more than he same amount in the future, due to its potential earning capacity.Time value of money How many square feet are in an acre?43,560 square feet Life insurance companies typically invest A third of their assets in their real estate loans The Environmental Protection Agency was created by the National Environmental Policy Act in 1969. It was created to Establish environmental standards or land use planning.Which act created a special tax vehicle called REMIC?The Tax Reform Act of 1986.How long does title insurance stay in effect? Until the property sells again Transfer of interest, equal ownership, unity of ownership, and survivorship are all requirements of Joint tenancy If a person dies with no legal heirs or relations andhas left no valid will, what happens to real propertyowned by that person?It is taken by the state according to the process called escheat Which act started the REITs?The Real Estate Investment Trust of 1960

The cost approach would be most reliable for which of these properties?County court houses What is a transfer by will?A private grant that occurs when the owner dies Loan amountLTV ratio x property value What is a housing concept that produces a high density of residential housing units, a maximum use of open spaces, and greater development flexibility?A planned unit development What is the overall bargain and sale covenant? I may or may not own, and I won't defend A lender was requiring an applicant to pay a higher down payment because of the neighborhood they lived in. The lender is practicing Redlining Mary is getting a $95,000 loan at 7.5 percent and will pay 2 discount points. What will the effective interest rate be?

7.75% Which of the following states have not adapted the Torrens system?California The law states that a borrower may request that the lender

cancel the PMI when the borrower's equity equals:

20% of the purchaser's price Which aspect of a contract deals with when a tenant takes possession of the property?Demising clause InterestPrincipal x rate x time What does the acronym URLTA stand for?Uniform Residential Landlord and Tenant Act Income ratioTotal house payment / monthly income What is NOT a type of deed?Complete warranty deed What is usually the minimum period for a management contract?One year When performing a CMA, if a comparable has a feature

that the seller's property does not have, the licensee will:

Subtract the value of that feature from the price of the comparable What can a landlord do if a tenant is in default? File a suit for eviction Regulation Z applies to which if these situations?$85,000 condominium loan In which of the following types of loans is the payment allocated only to interest ?Straight During a loan interview, a lender always asks borrowers what church they attend. What law, if any, does this action violate?Equal Credit Opportunity Act (ECOA) When must a building permit be obtained? Before start of the project Conventional loans are typically uninsured. This means

that:

The mortgage itself provides the only security for the loan Debt ratioTotal monthly debt / monthly income What are the conventional loan guidelines for income and debt ratio?Income needs to be under 28%, and debt needs to be under 36%.What is a predatory lending practice that one might see with sub-prime loans?Lenders often add insurance and other unnecessary products to the sub-prime loan amount.Referred to as "dual responsibility", a property manager is responsible to both The owner and the tenant of a property

Who regulates federally-chartered savings institutions?Office of Thrift Supervision (OTS) Which of these agencies is a private corporation that is not in conservatorship?Farmer Mac LTV ratioLoan amount /.value The evaluation process used to determine the borrower's ability to repay a loan and estimating the value of the

property being used as collateral is called:

Underwriting What does ADA stand for?Americans with Disabilities Act What does TDR stand for?Transfer of development right Which of the following shows the value of a property in relation to its sales price and is issued by an approved VA appraiser when a veteran is seeking a DVA loan?Certificate of Reasonable Value What is the key factor for a buyer while purchasing a farm?Type of prospective products that buyer wants to produce Which statement about Ginnie Mae is false? Ginnie Mae is in conservatorshipwith the Federal Housing Finance Agency (FHFA) A parcel of land that is 250 feet wide and 200 feet deep and sold for $280,000 has a price per square foot of?$5.60 What is it called when an improvement to a property makes a change in the property's value?Contribution A licensed residential appraiser must:Provide 1,000 hours of acceptable and verifiable - real estate- appraisal experience.In an effort to make it possible for veterans returning from World War II to purchase a home, the Veterans Administration offered the opportunity for veterans to

purchase a home with:

No down payment What sort of potential liability would a listing agent have in a transaction like this one?Intentional fraud What type of deed would be used to transfer property at a public foreclosure auction?Sheriff's deed If a broker sells a property for $450,000 and makes $36,000. What is the rate of the commission?8%

Points-equal to 1% of loan amount-ex: 75,000 x .01 x 2 points =

1500 What might have been different if there had been a home inspector or contractor involved on the buyer's side?The truth of the situation may well have been clear to a professional home inspector or contractor.How do schools in the vicinity of a potential property influence the marketability of that property?Frequently, schools are the most important aspect in selecting a home for families and children..Investor Jim is in a syndicate that has asked each member to invest $5,000 in property that has yet to be identified.What strategy is this type of investment?Blind pool What does a lease guarantee?Both clauses 1 and 2 Arby's builds a new restaurant on the same street as Burger King and. McDonald's. What principle of value does this illustrate?Competition

The Fair Credit Reporting Act requires that lendersReveal the sources of credit information to the consumer Does the "as is" in the seller's disclosure form minimize risk concerns for the sellers?Minimizes, but does not eliminate risk concerns

Discount points-increased by 1/8% for each point-ex: 4 points with 7.25

interest- 4 points x 1/8% =4/8- 7.25 + .50 = 7.75 Preapproval differs for prequalification in that: It involves the completion of an actual loan application In a residential area of single-family homes, a contractor who owns a lot can build a single-family home without having to get special permission. What kind of right is it?An as-of-right use of the lot What kind of deed is used to convey land to a condominium developer?Master A licensee should keep in mind that the information on pending sales is not as reliable as on sold homes because The price shown is the listing price, not the sales price Investor Bob was contracted o purchase a piece of property when Agent Jill called and said a detective conveyance to the title was found. This would create a/an Clouded title to the property Texas requires that a will must be signed in the presence of all these EXCEPT People who are not related to the person signing the will What law requires meetings of governmental agencies and departments to be open to the public?The sunshine laws When deciding on rental rates, property manager needs to consider Both the owner's goals for return on investment and current rental rates in the area Borrower's who fall into the "Below A" categories are referred to as Sub-prime borrower's A buyer will not pay more for a home than what a buyer would pay for another home hat is equally attractive and available. This defines the principle of Substitution A licensee in the process in completing the CMA has a comparable that used a conventional loan to Finance the purchase of a property. Should he be concerned about making price adjustments on the comparable?No, the licensee should be concerned about property adjustments The ___ is based on the idea that money available at the present time is worth more than the same amount in the future, due to its potential earning capacity.Time value of money One of the main purposes of completed seller disclosure forms in Texas and other states is so that the buyer becomes rey aware of the potential ___ needed for the property prior to them making an offer.Work and expenses In what situation would a lease be automatically terminated?Property is foreclosed The provision of a mortgage that outlines what will happen if the borrower fails to pay the mortgage is called what?Acceleration clause How are property investments usually characterized?Long term, low risk

An underwriter must evaluate a borrower's: Ability to repay the loan