#1
Which of the following is a common type of real estate financing?
Mortgage
ExplanationA common loan secured by real estate, typically for purchasing a property.
#2
What is private mortgage insurance (PMI) in real estate financing?
Insurance protecting the lender in case of borrower default
ExplanationCoverage for the lender if the borrower fails to repay the mortgage.
#3
What is a 'down payment' in real estate financing?
A payment made at the beginning of a loan term
ExplanationInitial payment made by the buyer to secure a mortgage.
#4
What is the Debt-Service Coverage Ratio (DSCR) used for in real estate financing?
To evaluate a borrower's ability to cover loan payments
ExplanationAssessment of a borrower's income relative to loan obligations.
#5
What is the purpose of a 'pre-approval' in real estate financing?
To assess the buyer's creditworthiness and determine a tentative loan amount
ExplanationInitial evaluation of a buyer's financial eligibility for a mortgage.
#6
What does LTV stand for in real estate financing?
Loan to Value
ExplanationThe ratio of the loan amount to the property's value, used to assess risk.
#7
What is a 'balloon payment' in real estate financing?
A large final payment at the end of a loan term
ExplanationA sizable lump-sum payment due at the end of a loan period.
#8
In real estate, what does the term 'amortization' refer to?
The process of spreading out loan payments over time
ExplanationGradual repayment of a loan through scheduled installments.
#9
Which of the following is NOT a type of real estate investment?
Mutual Fund
ExplanationA type of investment vehicle unrelated to real estate.
#10
What does the term 'underwriting' mean in real estate financing?
The process of assessing borrower creditworthiness and risk
ExplanationEvaluation of a borrower's financial capacity and loan eligibility.
#11
What is a 'cap rate' in real estate investment?
The rate of return on a property based on its income
ExplanationA measure of investment profitability relative to property income.
#12
What is the main purpose of a title search in real estate financing?
To ensure there are no liens or encumbrances on the property
ExplanationTo verify the property's ownership history and legal status.
#13
What is the role of an escrow account in real estate transactions?
All of the above
ExplanationIt holds funds and documents until the completion of a real estate transaction.
#14
What does the term 'appraisal' mean in real estate?
The process of assessing a property's value
ExplanationEvaluation of a property's worth based on various factors.
#15
What is the role of a 'title insurance' policy in real estate transactions?
To provide insurance against title defects or claims
ExplanationProtection against financial loss due to title issues.
#16
What is the purpose of a 'quitclaim deed' in real estate?
To transfer ownership without making any warranties or guarantees
ExplanationA legal document used to transfer interest in a property.