Property Valuation and Financing Flashcards
7 cards from real Wisconsin Real Estate License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Property Valuation and Financing flashcards as text
A mortgage in which each payment covers both principal and interest, fully repaying the loan by the end, is called:
Answer: An amortized loan
An amortized loan pays off both principal and interest gradually so the balance is zero at maturity.
In a mortgage, which party is the borrower who pledges the property as security?
Answer: Mortgagor
The mortgagor is the borrower who gives the mortgage as security to the lender (mortgagee).
What type of loan has an interest rate that changes periodically based on an index?
Answer: Adjustable-rate mortgage
An adjustable-rate mortgage (ARM) has a rate that adjusts periodically according to a market index.
A clause allowing the lender to demand full payment if the property is sold is known as a:
Answer: Due-on-sale (alienation) clause
A due-on-sale or alienation clause lets the lender call the loan due when the property is transferred.
Which government-backed loan program requires no down payment for eligible veterans?
Answer: VA loan
VA loans guaranteed by the Department of Veterans Affairs allow eligible veterans to buy with no down payment.
Private mortgage insurance (PMI) is typically required on a conventional loan when the down payment is:
Answer: Less than 20%
PMI is generally required when a borrower puts down less than 20% on a conventional loan.
The ratio comparing a loan amount to the property's appraised value is the:
Answer: Loan-to-value (LTV) ratio
The loan-to-value ratio measures the loan amount as a percentage of the property's value.