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
Points paid to a lender to lower the interest rate on a loan are called:
Answer: Discount points
Discount points are prepaid interest paid at closing to reduce (buy down) the loan's interest rate.
One discount point equals what percentage of the loan amount?
Answer: 1%
One point equals one percent of the loan amount.
The federal law requiring lenders to disclose the true cost of credit, including APR, is:
Answer: Truth in Lending Act (Regulation Z)
The Truth in Lending Act, implemented by Regulation Z, requires disclosure of financing costs and APR.
Which law prohibits lenders from receiving kickbacks and regulates settlement service disclosures?
Answer: RESPA
The Real Estate Settlement Procedures Act (RESPA) bans kickbacks and governs settlement disclosures.
A loan where the borrower pays only interest during the term and repays principal in a lump sum at the end has a:
Answer: Balloon payment
A balloon loan requires a large lump-sum payment of remaining principal at the end of the term.
What does APR represent that a simple note rate does not?
Answer: The total cost of credit including certain fees
APR reflects the effective yearly cost of a loan including interest and certain finance charges.
A seller who finances the buyer's purchase directly by taking back a note is providing a:
Answer: Purchase-money mortgage
A purchase-money mortgage is seller financing where the seller extends credit to the buyer.