Question 1

The interest rate of an adjustable rate mortgage may rise or fall based on the

Accepted Answer

A)  interest rate cap. 
B)  adjustment period. 
C)  index. 
D)  margin. 
A)  interest rate cap. 
B)  adjustment period. 
C)  index. 
D)  margin. C

Question 2

Each of the following statements about open-end mortgage clauses is true EXCEPT

Accepted Answer

A)  using an open-end clause, the new amount borrowed is added to the mortgage balance. 
B)  they are used in government loans like DVA and FHA. 
C)  they are used in conventional mortgages. 
D)  funds borrowed using an open-end clause are reamortized over the remaining like of the mortgage. 
A)  using an open-end clause, the new amount borrowed is added to the mortgage balance. 
B)  they are used in government loans like DVA and FHA. 
C)  they are used in conventional mortgages. 
D)  funds borrowed using an open-end clause are reamortized over the remaining like of the mortgage. B

Question 3

A mortgage secured by two or more properties is called a ____________________ mortgage.

Accepted Answer

blanket

Question 4

Choose the one most appropriate answer for each.
-a mortgage loan on which the rate of interest can rise and fall with changes in prevailing interest rates

Accepted Answer

A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage 
A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage

Question 5

The index stays constant over the life of the loan but the margin will vary.

Accepted Answer

A) True 
 B)False

Question 6

One of the main differences between a land sales contract and a purchase money mortgage is

Accepted Answer

A)  the passing of title. 
B)  interest charged. 
C)  time between payments. 
D)  the term of the loan. 
A)  the passing of title. 
B)  interest charged. 
C)  time between payments. 
D)  the term of the loan.

Question 7

Choose the one most appropriate answer for each.
-a financing arrangement whereby an owner-occupant sells the property and then remains as a tenant

Accepted Answer

A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage 
A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage

Question 8

Under the terms of a shared appreciation mortgage

Accepted Answer

A)  the loan is made at a below-market interest rate. 
B)  the lender received a portion of the property's appreciation. 
C)  both a and b. 
D)  neither a nor b. 
A)  the loan is made at a below-market interest rate. 
B)  the lender received a portion of the property's appreciation. 
C)  both a and b. 
D)  neither a nor b.

Question 9

The interest rate of a loan from a local savings and loan may be increased or decreased during the life of the loan. This is an example of

Accepted Answer

A)  a variable interest rate. 
B)  escalated interest. 
C)  graduated interest. 
D)  percentage interest. 
A)  a variable interest rate. 
B)  escalated interest. 
C)  graduated interest. 
D)  percentage interest.

Question 10

Construction loans are

Accepted Answer

A)  long term, low risk. 
B)  long term, high risk. 
C)  short term, high risk. 
D)  short term, low risk. 
A)  long term, low risk. 
B)  long term, high risk. 
C)  short term, high risk. 
D)  short term, low risk.

Question 11

By law lenders are required to disclose an interest rate cap.

Accepted Answer

A) True 
 B)False

Question 12

When two or more properties serve as collateral for the same loan, it is called a

Accepted Answer

A)  blanket mortgage. 
B)  tandem mortgage. 
C)  security mortgage. 
D)  blended rate mortgage. 
A)  blanket mortgage. 
B)  tandem mortgage. 
C)  security mortgage. 
D)  blended rate mortgage.

Question 13

When an existing loan at a low interest rate is refinanced by a new loan at an interest rate between the current market rate and the rate of the old loan, the result is a

Accepted Answer

A)  combined rate. 
B)  blended loan. 
C)  wraparound loan. 
D)  merged loan. 
A)  combined rate. 
B)  blended loan. 
C)  wraparound loan. 
D)  merged loan.

Question 14

Choose the one most appropriate answer for each.
-a right, for a given period of time, to buy, sell, or lease property at present price and terms

Accepted Answer

A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage 
A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage

Question 15

Some real estate agents and lenders refer to a loan that is carried back by a seller as a purchase money mortgage.

Accepted Answer

A) True 
 B)False

Question 16

The first step toward mortgage loans with adjustable interest rates came in the late 1800s.

Accepted Answer

A) True 
 B)False

Question 17

A loan where items classed as personal property are included with the real estate is called a(n)____________________ mortgage.

Accepted Answer

The answer of A loan where items classed as personal...

Question 18

For a successful wraparound, it is necessary to have an existing mortgage with

Accepted Answer

A)  a below-market interest rate. 
B)  a due-on-sale clause. 
C)  an above market interest rate. 
D)  an alienation clause. 
A)  a below-market interest rate. 
B)  a due-on-sale clause. 
C)  an above market interest rate. 
D)  an alienation clause.

Question 19

A payment cap leaves open the amount the borrower's monthly payment can increase in any one year.

Accepted Answer

A) True 
 B)False

Question 20

Choose the one most appropriate answer for each.
-a method of selling and financing property whereby the buyer obtains possession but the seller retains the title

Accepted Answer

A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage 
A) adjustment period 
B) adjustable rate mortgage (ARM) 
C) blanket mortgage 
D) blended-rate loan 
E) buy-down mortgage
F)carryback financing
G)contract for deed
H)equity mortgage
I)equity sharing
J)graduated payment mortgage
K)interest rate cap
L)negative amortization
M)option
N)overencumbered property
O)package mortgage
P)payment cap
Q)reverse mortgage
R)sale and leaseback
S)subordination
T)wraparound mortgage

Exam 13: Types of Financing

The interest rate of an adjustable rate mortgage may rise or fall based on the

Each of the following statements about open-end mortgage clauses is true EXCEPT

A mortgage secured by two or more properties is called a ____________________ mortgage.

Choose the one most appropriate answer for each. -a mortgage loan on which the rate of interest can rise and fall with changes in prevailing interest rates

The index stays constant over the life of the loan but the margin will vary.

One of the main differences between a land sales contract and a purchase money mortgage is

Choose the one most appropriate answer for each. -a financing arrangement whereby an owner-occupant sells the property and then remains as a tenant

Under the terms of a shared appreciation mortgage

The interest rate of a loan from a local savings and loan may be increased or decreased during the life of the loan. This is an example of

Construction loans are

By law lenders are required to disclose an interest rate cap.

When two or more properties serve as collateral for the same loan, it is called a

When an existing loan at a low interest rate is refinanced by a new loan at an interest rate between the current market rate and the rate of the old loan, the result is a

Choose the one most appropriate answer for each. -a right, for a given period of time, to buy, sell, or lease property at present price and terms

Some real estate agents and lenders refer to a loan that is carried back by a seller as a purchase money mortgage.

The first step toward mortgage loans with adjustable interest rates came in the late 1800s.

A loan where items classed as personal property are included with the real estate is called a(n)____________________ mortgage.

For a successful wraparound, it is necessary to have an existing mortgage with

A payment cap leaves open the amount the borrower's monthly payment can increase in any one year.

Choose the one most appropriate answer for each. -a method of selling and financing property whereby the buyer obtains possession but the seller retains the title

Nature and Description of Real Estate

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