Real Estate Investing FREE Real Estate Investing Real Estate Financing Strategies Questions and Answers 2

Question 1

Which financing strategy allows an investor to assume the seller's existing mortgage terms instead of obtaining a new loan?

Accepted Answer

Subject-to financing

Answer

Hard money lending

Answer

Seller carryback

Answer

Blanket mortgage

Question 2

What is the primary advantage of using a DSCR loan for investment property financing?

Accepted Answer

Qualification is based on property cash flow rather than personal income

Answer

It requires no down payment

Answer

Interest rates are always below conventional loans

Answer

It eliminates the need for property appraisal

Question 3

In a wraparound mortgage, what happens to the original underlying loan?

Accepted Answer

It remains in place while the new loan wraps around it at a higher amount

Answer

It is paid off immediately at closing

Answer

It is transferred to the new buyer's name

Answer

It is converted into a home equity line of credit

Question 4

What is the typical loan-to-value ratio range that most hard money lenders offer on investment properties?

Accepted Answer

60% to 75%

Answer

90% to 100%

Answer

80% to 95%

Answer

50% to 55%

Question 5

Which federal program allows investors to use tax-advantaged financing in designated low-income census tracts?

Accepted Answer

Opportunity Zone funds

Answer

1031 exchange

Answer

FHA 203(k) loans

Answer

USDA rural development loans

Question 6

What is the main risk of using a balloon payment mortgage to finance an investment property?

Accepted Answer

The entire remaining balance becomes due on a specific date, creating refinance risk

Answer

Monthly payments increase each year by a fixed percentage

Answer

The interest rate resets daily based on market conditions

Answer

The lender can demand additional collateral at any time