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NH RE Exam 1
| Question | Answer |
|---|---|
| An apartment has total operating expenses of $75,000 a year and income of $750 a month for each of its 15 units. If an investor wants a 12% return on his money, what is the value of this property to him? | $500,000 $750 x 15 = $11,250 income per month; $11,250 x 12 = $135,000 income per year; $135,000 income - $75,000 expenses = $60,000 annual net operating income. Convert 12% to a decimal and divide; $60,000 12 = $500,000 value to investor. |
| An offer has been accepted by the buyer and the seller. The buyer and seller instruct the broker to return the deposit money to the seller. The broker: | Must return the deposit money but can sue for the commission The broker is this type of circumstance must return the deposit money if instructed to do so by the seller. However, the broker can choose to sue for any commission money due if needed. |
| Jim is a mortgagor. Jim is required to pay for mortgage insurance to either the FHA or to a PMI company. The amount that Jim has to pay is called the: | Mortgage insurance premium The amount paid by a mortgagor for mortgage insurance is called the mortgage insurance premium. It can be paid to either a government agency or to a private entity. |
| A violation of the Sherman Anti-Trust Act could be: | Competing Brokers discussing fees and business practices Any discussion between competitors could be seen as an attempt to conspire to set the cost of real estate brokerage services, which is in violation of the Sherman Anti-Trust Act. |
| If a property is located in a federally designated flood area, which type of insurance compensates for physical property damage as a result of flooding? | Flood insurance Flood insurance is required when a property is located in a federally designated flood area. Flood insurance compensates for physical property damage resulting from flooding. |
| A quiet title action, also referred to as a suit to quiet title, is a court proceeding intended to: | Establish the true ownership of a property A quiet title action, also referred to as a suit to quiet title, is a court proceeding intended to establish the true ownership of a property. |
| An interest in real property can be obtained by: | Prescription Typically an easement is an interest in real property and it is acquired by prescription. |
| The Government National Mortgage Association, that provides funds for government loans like FHA and VA, is also known as: | Ginnie Mae Ginnie Mae is the other name for the Government National Mortgage Association. It was created by Congress and provides funds for FHA and VA loans. |
| If Henry, a broker, listed Sam’s property for sale, Sam would be referred to as the broker’s: | Client A seller of a property that is listed with a broker is the considered the broker’s client, principle, or seller. The buyer of the property is considered the “customer.” |
| An agent given power of attorney to act on behalf of a principal for an unlimited range of legal matters is called: | A universal agent A universal agent is an agent that is given the power of attorney to act on behalf of a principal for an unlimited range of legal matters. |
| A situation in which an individual or organization is involved in several potentially competing interests, creating a risk that one interest might unduly influence another interest, is known as: | A conflict of interest A situation in which an individual or organization is involved in several potentially competing interests, creating a risk that one interest might unduly influence another interest, is known as a conflict of interest. |
| In every loan payment that includes interest, the loan payments consist of a portion that is applied to pay the accruing interest and a portion applied to the principal. As time goes on, the interest portion does NOT ____ as the loan balance ____. | Increase, decreases As time goes on in a loan, the interest portion of a loan payment decreases as the loan balance decreases. Eventually this loan will be fully amortized. The interest portion does not increase as the loan balance decreases. |
| Out of the following, which of these could be considered real property? | Airspace above the land In this case, the airspace above the land would be the best answer from the choices given. It can be considered real property. Fixtures are generally considered personal property. |
| Normal wear and tear from use would NOT be considered: | All of these Normal wear and tear from use is not considered any form of obsolescence. |
| Disputes over the ownership of a property can be protected against by purchasing: | Title Insurance Title insurance protects the lender or the buyer against any loss arising from the dispute over ownership of a property. |
| When a real estate developer obtains a loan for building a new housing tract and the lender gives part of the funds to the developer and agrees to release the rest of the funds as each home is built, this is called which type of financing: | Obligatory In this type of situation, this financing is called obligatory financing or also called fixed disbursement schedule. |
| One of the main differences between a mortgage broker and a mortgage banker is: | The source of the funds used for loans Typically a mortgage broker does not use their own funds to make loans, but merely negotiates the loans. A mortgage banker, on the other hand, usually has the funds in which to make the loan. |
| A deed is a legal document that: | Conveys title to property A legal document that coveys title to property is a deed. |
| In New Hampshire, if a property manager is defined as an “innkeeper”, they: | Do not need to hold a real estate license “innkeeper” is defined as those that manage properties intended to be occupied by residents or guests for less than ninety days. This would include hotels, motels, and like businesses. |
| Which of these is associated with a deed? | Defeasible Fee A defeasible/indefeasible fee is associated with a deed. The other listed choices are associated with a mortgage. |
| If Greg and Tom agree orally that Tom will clean the windows on Greg’s house twice a month, Greg and Tom have a: | Valid Contract A valid contract can be oral or written and is binding in a court of law. In this case, Greg and Tom have a valid contract. |
| Which of these are NOT included in a spot survey of a single lot? | Nearby schools Nearby schools would not be included in a spot survey. Spot surveys identify property improvements, Encroachments, and Easements. |
| If an object is attached to real property and later becomes detached from said real property to become personal property, what is this called? | Severance Severance is when an item that was once attached to real property becomes detached from that real property and is now considered personal property. It changed from real property to personal property through severance. |
| If the Federal Reserve Board lowered the reserves required of member banks, this would do what to the amount of money available in the national economy? | Increase the amount of money available in the economy If the Federal Reserve Board lowers the reserves required of member banks this increases the amount of money available in the national economy. |
| A thorough inspection done by a professional that evaluates and determines the structural and mechanical condition of the property is called: Correct | A home inspection A thorough inspection done by a professional that evaluates and determines the structural and mechanical condition of the property is called a home inspection. |
| If a dispute over ownership of a property occurs, a property owner would likely be protected from loss if they had purchased: | Title insurance Title insurance protects the lender or the buyer against loss arising from disputes over ownership of a property. |
| If a homeowner wishes to receive monthly checks or a lump sum based on the equity in their home that does not have to be paid back until either the property is sold or the owner dies, they would need to obtain: | Reverse mortgage This type of tapping of equity in a home is called a reverse mortgage. |
| In a lease-purchase, the tenant-buyer wants to purchase a property but does not have the down payment or ability to purchase the property outright. Which of these occurs with the rental payments? | A portion of the rental payment will be applied to the purchase price This gradually reduces the total price of the property allowing the tenant-buyer to complete the purchase of the property at a later time when it becomes possible to do so. |
| If a married couple acquires property during their marriage, the property is considered to be: | Both Jointly owned and community property Community property determines that property acquired by a married couple during their marriage is considered to be jointly owned. |
| When Jared, a licensed real estate agent, obtains an exclusive listing for a property in his own neighborhood, Jared has obtained: | A written contract giving him the exclusive right to sell the property for a specified time When a licensed real estate agent obtains an exclusive listing, they are obtaining a written contract |
| Government loans are guaranteed by: | RHS The Rural Housing Service (RHS) is one of the institutions that guarantees government loans. The other is the Veteran’s Administration (VA). |
| A “no cash-out refinance” is also sometimes referred to as a: Correct | Rate and term refinance It recalculates the new balance to cover the balance due on the current loan as well as covering any costs associated with obtaining the new mortgage. |
| If a person is obtaining a loan through the government (FHA and VA), which entity provides the funds for the government loan? | Ginnie Mae Ginnie Mae is a government owned institution created on September 1, 1968. It performs the same functions as Freddie Mac or Fannie Mae, except it provides funds for government loans. |
| An estate can be best described as: | The sum total of all the real and personal property owned by an individual at the time of death Remember, sometimes the correct answer is the "most correct" answer even if some answer choices could also be correct. |
| If Betty lists her property with Jerry, a licensed real estate agent, and signs a written agreement that states Jerry is the only one entitled to the listing for a specific period of time, she has given Jerry a(n): | Exclusive listing When Betty gives Jerry the written contract that states he is the only one entitled to the listing for a specific period of time, she has given him an exclusive listing. |
| A lender may ask if an applicant is married, but cannot ask if an applicant is divorced or widowed under which act? | The Equal Credit Opportunity Act Under the Equal Credit Opportunity Act, a lender can ask whether an applicant is married, unmarried, or separated, but cannot ask specifically if the applicant is divorced or widowed. |
| An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts is called a: | Servicer A servicer is a company or organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. |
| Shelley v. Kraemer is the Supreme Court case that held: | Private racially based restrictive covenants are invalid under the Fourteenth Amendment The Supreme Court case that held private racially based restrictive covenants are invalid under the Fourteenth Amendment is Shelley v. Kraemer. |
| The four components of a monthly mortgage payment on impounded loans are: | Principle, interest, taxes, and insurance PITI stands for Principle, Interest, Taxes, and Insurance. They are the four components of a monthly mortgage payment on impounded loans. |
| A vendor-vendee is a term that best describes the relationship between: | Purchase-and-sales The term vendor-vendee is best matched with purchase-and-sales. |
| Freddie Mac and Fannie Mae have loan limits on anything over: | $424,000 Any loan amount over $424,000 is considered a jumbo loan or a non-conforming loan and exceeds the loan limits of Freddie Mac and Fannie Mae as of 2017. |
| A judgment by the court ordering the sale of property is known as: | A writ of execution A writ of execution is issued by the court ordering the sale of a property. |
| This is a type of ownership where individuals actually own the building or unit they live, but common areas are owned jointly (not an undivided interest) with the other members of the development or association: | Planned unit development. This differs from a condominium in that there is an undivided ownership in the common elements, meaning that everyone is part owner but no one owns a certain percentage like in a PUD development. |
| Which of the following are examples of negotiable instruments? | All of these All of the examples given are negotiable instruments: Draft, Check, Promissory note. |
| The mortgage that usually has priority is: | The one that has been recorded first The priority of a trust deed or mortgage is established by recording. The one that is recorded first gets priority. |
| Which of these is considered to be an encumbrance? | All of these A lease, mortgage, easement, or restriction is considered an encumbrance of a fee simple title. |
| The fund set aside for replacement of common property in a condominium, PUD or cooperative project is called a: | Replacement reserve fund This type of fund is called a replacement reserve fund. It is set aside for replacement of common property in certain projects. |
| Typically, a penalty that a borrower must pay if the payment is at least fifteen days late on a first mortgage is best called: | A late charge A late charge is a penalty that a borrower must pay if the payment is at least fifteen days late on a first mortgage. This timeframe can vary, but the most typical is at least fifteen days. |
| This is a term that determines that property acquired by a married couple during their marriage is considered to be jointly owned: | Community property Community property assumes that a property purchased by a married couple is considered to be jointly owned. |
| The first step of a jurisdiction attempting to enact eminent domain is to: | Attempt to purchase the property in question The first step of the jurisdiction would be to attempt to purchase the property at a fair market rate. |
Created by:
vele
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