#1
What does the term 'amortization' refer to in real estate finance?
The gradual repayment of a loan over time
ExplanationAmortization refers to gradual loan repayment.
#2
In the context of real estate finance, what does the acronym 'LTV' stand for?
Loan-to-Value
ExplanationLTV stands for Loan-to-Value ratio.
#3
What does the term 'underwriting' mean in real estate financing?
The assessment of a borrower's creditworthiness and risk
ExplanationUnderwriting assesses borrower's risk and creditworthiness.
#4
What is a common characteristic of a fixed-rate mortgage?
The monthly payments remain constant over the life of the loan
ExplanationFixed-rate mortgages have constant monthly payments.
#5
What does the term 'escrow' refer to in real estate transactions?
A financial arrangement where a third party holds funds on behalf of the buyer and seller
ExplanationEscrow involves a third party holding funds in transactions.
#6
Which entity typically sets the minimum down payment requirements for mortgages in the United States?
Department of Housing and Urban Development (HUD)
ExplanationHUD sets minimum down payment requirements for US mortgages.
#7
What is a Debt-Service Coverage Ratio (DSCR) used for in real estate finance?
To measure a property's ability to generate income
ExplanationDSCR evaluates property income generation capability.
#8
What is the purpose of the Truth in Lending Act (TILA) in the United States?
To ensure fairness and accuracy in credit transactions
ExplanationTILA aims for fairness and accuracy in credit.
#9
What is Private Mortgage Insurance (PMI) typically required for?
Loans with a loan-to-value ratio above 80%
ExplanationPMI is required for loans with LTV above 80%.
#10
What is a balloon payment in the context of real estate financing?
A large, lump-sum payment due at the end of a loan term
ExplanationBalloon payment is a large sum due at loan term's end.
#11
What regulatory body oversees the regulation of mortgage lenders and servicers in the United States?
Consumer Financial Protection Bureau (CFPB)
ExplanationCFPB regulates US mortgage lenders and servicers.
#12
What is the primary purpose of a Real Estate Investment Trust (REIT)?
To invest in and manage income-producing real estate
ExplanationREITs invest in and manage income-producing real estate.
#13
Which entity regulates the secondary mortgage market in the United States?
Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac)
ExplanationFannie Mae and Freddie Mac regulate the secondary mortgage market.
#14
Which of the following is a type of real estate appraisal method?
Comparable sales approach
ExplanationComparable sales approach is a real estate appraisal method.
#15
What does the term 'debt-to-income ratio' (DTI) represent in real estate lending?
The ratio of a borrower's monthly debt payments to their gross monthly income
ExplanationDTI is the ratio of monthly debt payments to gross income.