Texas Real Estate License Exam Section 2 of 6: Principles of Real Estate 2
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| show | any number between zero and infinity; not fractions or negative numbers
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| show | part of a whole; not a whole number
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| Numerator | show 🗑
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| Denominator | show 🗑
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| show | when the value of the numerator is greater than the denominator
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| show | a number consisting of a whole number and a fraction.
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| Decimal | show 🗑
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| show | the quantitive relation between two numbers
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| Percentage | show 🗑
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| show | a financial gain; making more money selling a product than buying or producing the product
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| show | a financial loss; making less money selling a product than buying or producing the product
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| Interest | show 🗑
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| Principal | show 🗑
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| Mortgage | show 🗑
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| Down Payment | show 🗑
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| show | repayment of a loan principal over time based on a predetermined schedule of payments
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| show | any number between zero and
infinity
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| Fraction | show 🗑
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| Numerator | show 🗑
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| Denominator | show 🗑
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| show | when the numerator (the number on top) is smaller than the denominator
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| show | the largest number that divides both the denominator and the numerator to reduce fractions to their simplest form
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| Decimal | show 🗑
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| Percentage | show 🗑
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| Part | show 🗑
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| show | the “final” or “end result” number; the denom- inator (4 of 3/4)
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| show | a financial gain or the increase in value
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| Loss | show 🗑
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| Interest | show 🗑
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| show | the sum of money lent to a borrower
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| show | the repayment of a loan principal
over time
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| Arrears | show 🗑
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| show | a legal agreement between a creditor & borrower in which the creditor lends money with interest to the borrower for the purchase of property w/ the condition that the creditor takes ownership of the title if the borrower defaults in repayment of the loan
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| show | the initial payment made when buying something on credit; a down payment is paid directly by the buyer to the seller
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| Proration | show 🗑
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| show | a unit of area measurement used
to compare the size of buildings (length x width)
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| Acreage | show 🗑
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| Appraisal | show 🗑
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| show | information about the area surrounding a property; this could include the city, region, and neighborhood in which the property is situated
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| Specific data | show 🗑
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| show | a simpler, abbreviated version of a regular appraisal.
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| show | the price for which a property will sell if offered openly under normal conditions. This refers to the economic principle; it’s the price that a buyer and seller would probably accept
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| show | refers to the value given by a licensed appraiser during the mortgage origination process. Appraisers are chosen by lenders but paid for by the homebuyer.
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| Assessed Value | show 🗑
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| Loan-to-value ratio (LTV) | show 🗑
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| Subject Property | show 🗑
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| show | what is achieved when the property is used for the most appropriate purpose with the highest returns
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| show | the present value of a property is affected by the anticipated income or utility that property will give its property owner.
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| Principle of Contribution | show 🗑
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| Principle of Substitution | show 🗑
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| Principle of Change | show 🗑
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| Principle of Conformity | show 🗑
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| Principle of Regression | show 🗑
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| show | higher-value properties surrounding a subject property can bump up the value of the property
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| Principles of Suppy and Demand | show 🗑
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| Sales Comparison Approach | show 🗑
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| Cost Approach | show 🗑
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| show | determining value by consider- ing how much income the property could generate when used as rental property
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| show | the loss of value because of obsoles- cence (becoming obsolete) or deterioration
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| show | loss of value because a property’s function or appearance has gone out of style or has been replaced by a more appealing version
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| External obsolescence | show 🗑
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| Deterioration | show 🗑
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| show | the literal age of the property; a home built 30 years ago has a chronological age of 30
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| Effective age | show 🗑
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| Reconciliation | show 🗑
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| show | a report from a licensed appraiser
that sums up a property’s market value based on collected data
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| Appraisal Review | show 🗑
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| show | when the lender carries out an appraisal review at their desk (as opposed to sending someone out into the field) to make sure the original appraisal is accurate
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| show | when a third-party appraiser is sent back out to the property to check the validity of the first appraisal
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| Comparative Market Analysis (CMA) | show 🗑
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| show | the price for which a property will sell if offered openly under normal conditions
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| show | the property that is the “subject” of the CMA
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| show | the recently sold homes that are compared to the subject property in a CMA
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| show | the arena in which borrowers and lenders meet up for the purposes of negotiating loans terms of a mortgage transaction
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| Secondary Mortgage Market | show 🗑
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| Government-Sponsored Enterprises | show 🗑
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| show | a government-sponsored enterprise (GSE) providing a secondary market for agricultural and rural mortgage loans; also known as Farmer Mac
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| Depository Lenders | show 🗑
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| show | specialize in long-term residential loans; primary function is to promote thrift and home ownership
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| show | eleven private, wholesale regional U.S. banks chartered to regulate member organizations, set reserve requirements, establish discount rates, and provide insurance for depositors
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| show | created by Congress in 1933 to insure deposits, supervise financial institutions, make large financial institutions resolvable, and manage receiverships
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| show | designed to be safe deposito- ries and lenders for a multitude of commercial bank- ing activities, relying mainly on demand deposits (checking accounts) for their basic supply of funds
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| Credit Unions | show 🗑
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| Savings Banks | show 🗑
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| Life Insurance Companies | show 🗑
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| show | not bankers in the traditional sense, but as private entrepreneurs, their income is derived from fees received for originating and servicing real estate loans
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| show | bring together borrowers and lenders and earns a fee for that service
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| Fannie Mae | show 🗑
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| show | a government-sponsored enterprise created in 1970 to further support the secondary mortgage market, specifically to support smaller thrift banks
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| Ginnie Mae | show 🗑
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| Balloon Payment | show 🗑
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| show | the first step in the loan application process where lenders take prospective borrow- ers at their word and give borrowers a general esti- mate of the amount for which they will be approved
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| show | the second step in the loan appli- cation process where lenders thoroughly review the borrower’s qualifications and, if approved, offer a pre-approval letter indicating the borrower’s ability to obtain financing.
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| Loan Approval | show 🗑
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| Amortization | show 🗑
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| show | when the interest rate does NOT change over the life of a loan
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| Adjustable-Rate | show 🗑
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| Flexible-Payment Loan | show 🗑
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| show | employs periodic payments that will not fully amortize the the loan, thereby requiring a final payment that is larger than previous payments
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| show | a type of balloon payment loan that calls for periodic payments of interest with the principal is to be paid in full at the end of the term as a balloon payment
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| Conventional Loan | show 🗑
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| show | a loan that is insured, guaranteed, or provided by any government agency
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| show | the loan-to-value ratio (LTV) is a ratio of debt to value of the property.
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| Nonconforming Loan | show 🗑
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| show | a division of
the General Land Office of Texas that administers three programs to assist Texas veterans in purchasing a principal residence and/or land and in financing home improvements
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| Texas Bootstrap Loan Program | show 🗑
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| show | a program that gives Texas veterans the opportunity to borrow up
to $150,000 to purchase land at competitive interest rates while typically requiring a minimum 5% down payment for tracts of one acre or more, only one of its kind in the nation
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| Targeted Area | show 🗑
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| Federal Reserve | show 🗑
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| show | rate banks charge other banks to lend money — the Fed indirectly controls this rate
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| Discount Rate | show 🗑
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| Prime Rate | show 🗑
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| show | the purchase and sale of securities in the open market by a central bank
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| show | a fixed-rate
mortgage that has a lower initial interest rate in its first years, but includes gradual increases each year
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| Bridge Loan | show 🗑
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| show | like a bridge loan, enables a borrower to obtain additional financing from a sec- ond lender without paying off the first loan — gives borrower new, increased rate at higher interest rate and assumes payment of existing loan
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| show | a mortgage with an interest rate higher than the rates of prime mortgages due to the higher risk associated with a less qualified bor- rower
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| Predatory lending | show 🗑
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| show | the right of a
borrower via Regulation Z of the Truth in Lending Act to rescind the transaction within three days by merely notifying the lender
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| show | law prohib- iting credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or use of public assistance
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| Usury Laws | show 🗑
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| Real Property | show 🗑
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| show | a government’s constitutional right to regulate an individual’s conduct or property to protect the health, safety, welfare, and morals of the community
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| show | the division of land within a jurisdiction into separate districts within which uses are permitted, prohibited, or permitted with conditions
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| show | permission granted by the government so that property may be used in a manner not allowed by the current zoning
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| show | sets of regulations pertaining to building design, materials, safety, sanitation, and structure
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| show | the power of government or public entity to take private property for public use without consent of the property’s owner
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| show | the governmental act of seizing private land through exercise of power of eminent domain
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| show | the legal doctrine by which the decedent’s property will pass to the state without their consent if that individual dies without a will, a surviving spouse, lineal descendants, or other known heirs
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| show | describes someone who dies without a will; their estate will be distributed to surviving heirs according to the law of descent
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| show | non-governmental limitations that control the land’s use
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| show | doc. that contains all essential info. about a property (distance over paved roads to nearby communities, # of homes currently occupied, soil conditions affecting foundations & septic systems, type of title a buyer will receive, and existence of liens)
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| show | the reversing or stopping of environ-
mental damage, such as mold remediation
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| Comprehensive Environmental Response, Com- pensation, and Liability Act (CERCLA) | show 🗑
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| show | a real estate license holder who oversees the day-to-day operation of a property for its owner
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| Resort Homes | show 🗑
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| show | a property purchased pri-
marily or exclusively for investment purpose rather than as a place to live
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| Improvements | show 🗑
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| show | land that has been designated for raising grazing livestock
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| show | a property that is owned
by a lender as result of a foreclosure and a failure to find a third-party buyer at a foreclosure auction
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| show | the sale of a property, with permission of the lender, for less than the balance of the mortgage -- loan; normally occurs when the borrower is no longer able to make their mortgage payments and hopes to avoid foreclosure proceedings
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| show | an auction in which a seller
reserves the right to accept or reject the highest bid within a predetermined time
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| Absolute Auction | show 🗑
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| Minimum Bid Auction | show 🗑
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| Foreclosure | show 🗑
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| show | a clause that allows the lender to require full payment of the loan under certain conditions
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| Investment | show 🗑
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| show | the increase in value of a property
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| Cash Flow | show 🗑
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| show | a percentage ratio of the amount of profit or loss to the original cost of investment
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| show | the numeric amount of profit
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| Rate of Return | show 🗑
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| show | the ratio of the price of investment property to its annual rental income before considering expenses like taxes and insurance, etc.
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| Liquidity | show 🗑
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| Time Value of Money | show 🗑
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| show | the use of debt as a tool to stretch an available pool of money farther by using it to mortgage many properties rather than purchase one or a few outright
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| Loan to value ratio | show 🗑
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| Operating Statement | show 🗑
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| show | a financial performance measure that reflects a property’s ability to generate positive cash flow
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| show | the total value of goods produced and/or services provided by a country in a year
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| Risk-reward Ratio | show 🗑
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| Feasibility study | show 🗑
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| Capital gain | show 🗑
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| show | the reduction property value over time
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| show | the addition, restoration, or remodel of a property in a way that increases property value and/or extends its useful life
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| Section 1031 Exchange | show 🗑
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| Syndication | show 🗑
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| Real Estate Investment Syndicate | show 🗑
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| Partnership | show 🗑
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| Limited partnership | show 🗑
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| show | business arrangement that a partnership will use when joining forces for a single business objective
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| Limited liability company (LLC) | show 🗑
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| show | a company that owns – and typically operates, income-producing real estate or real estate-related assets such as office buildings, shopping malls, apart- ments, hotels, resorts, self-storage facilities, ware- houses, and loans
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| Equity REIT | show 🗑
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| Mortgage REIT | show 🗑
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| show | a REIT that combines the income-earn-ing efforts of both the equity and mortgage trust
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| Special Purpose Vehicle | show 🗑
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| show | asset-backed securi- ties, where the underlying asset is a single mortgage or a bundle of mortgages that serve to back the securities
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| show | the environment in which mortgage lenders sell home loans they originate to government agencies or investment bankers
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| show | collateralized debt obligations (CDOs) that are made up of bundles or pools of mortgage-back securities (MBS) created by government agencies or investment banks and issued as investment-grade bonds; almost all CMOs are REMICs
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| Tranches | show 🗑
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| show | a REMIC is a (SPV) that holds commercial and residential mortgages in trust, assembles said mortgages into pools based on risk, & then issues bonds (securities) on these pools to sell to investors on the secondary mortgage market
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| show | a contract in which one party conveys prop-
erty to another for a specific predetermined period of time, generally in return for periodic payment
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| Landlord | show 🗑
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| show | the party to whom the lease is granted, a.k.a. the lessee
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| Illegal Target Marketing | show 🗑
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| Redlining | show 🗑
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| show | the illegal practice of causing owners to sell their homes by creating fear that minorities are moving into the area; also known as panic peddling
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| show | an illegal act of channeling buyers or ten- ants to certain areas, either to keep or change the the area demographically
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| Leasehold Estate | show 🗑
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| Freehold Estate | show 🗑
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| Reversionary Interest | show 🗑
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| show | a leased possession of property for a certain, specific period of time; also known as a tenancy for years
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| Periodic Estate | show 🗑
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| show | when a tenant is occupying a property with the landlord’s knowledge and con- sent, but without a formal lease agreement
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| Tenancy at Sufferance | show 🗑
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| show | tenant in a tenancy at sufferance
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| Competent | show 🗑
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| show | the mutual agreement of all parties to a lease to consent to all terms contained with- in the contract and to perform according to those terms
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| Consideration | show 🗑
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| show | the initial rental period from com- mencement to expiration; the duration of the lease
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| Covenant of Quiet Enjoyment | show 🗑
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| show | to terminate the lease agreement
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| show | occurs when the tenant of a property leases to a subtenant either in place of or in addition to the tenant
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| Actual Eviction | show 🗑
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| show | termination of the lease in circumstances where the landlord intentionally failed to provide required repairs or maintenance to such a degree that the premises are considered unusable
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| Normal Wear and Tear | show 🗑
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| show | lease in which the tenant pays a simple, flat rent every month
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| Net Lease | show 🗑
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| show | any net lease that requires a tenant to pay a base rent, property taxes, and insurance
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| Triple-Net Lease | show 🗑
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| show | type of (usually commercial) lease in which the tenant pays a base rent amount and a percentage of their business profits to the landlord
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| show | a leasehold agreement in which the base rent changes
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| Graduated Lease | show 🗑
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| show | variable lease agreement that allows for a graduated increase of rent at periodic intervals, with increases relative to some economic indicator, such as the Consumer Price Index
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| show | lease of bare, undeveloped land
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| show | grants the exclusive right to ex- tract any oil or gas from the ground beneath a property
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| Lease Purchase Agreement | show 🗑
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| show | agreement in which a business owner sells their interest in a property and then leases it back at the same month- ly rate, usually from an investor owner and, in doing so, frees up capital for other business ventures
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| Property Managers | show 🗑
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| REO Property | show 🗑
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| Rent Roll | show 🗑
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| Operating Budget | show 🗑
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| Capital expenditures | show 🗑
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| show | section of commercial lease that gives a tenant the exclusive right to operate their business without any competition in the same property
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| show | the government agency charged with the task of ensuring that employers are responsible for providing safe and healthful workplaces for their employees
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| Deed | show 🗑
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| show | deed that provides the greatest protection for the buyer
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| show | a deed where the grantor warrants only that the property was not encumbered during the time they held title, except as noted in the deed, and that they have done nothing during ownership to cloud or damage the title
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| Bargain and Sale Deed | show 🗑
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| Quitclaim Deed | show 🗑
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| show | a method of delivering a deed into a trust from a trustor to a trustee
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| show | a bundle of rights with regards to a piece of property in which a party may own a legal or equitable interest
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| show | an abbreviated history of a property, including info on any transfers, grants, wills, conveyances, liens, and encumbrances
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| Title Policy | show 🗑
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| show | the process of placing documents into
the public record per state law
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| Chain of Title | show 🗑
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| show | an examination of all public records in the county to determine who has rights in the proper- ty and whether any defects exist in the chain of title
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| show | an abbreviated history of a property, including info on any transfers, grants, wills, conveyances, liens, and encumbrances
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| Marketable Title | show 🗑
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| show | proof of ownership of the property
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| Title Defect | show 🗑
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| show | title process in which a property owner obtains a certificate that is recorded in the public records; not used in Texas
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| Alienation | show 🗑
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| show | the transfer of real estate by use of a written instrument
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| show | the process of gaining ownership or control of real property or an interest in real property
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| show | an impartial, qualified appraiser’s written opinion of value of a specific property as of a specific date, supported by relevant market information
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| Condemnation | show 🗑
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| show | an interest in real property that affords a person the right to make limited use of another per- son’s real property
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| show | the degree, quantity, nature, and extent of
one’s interest in property
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| Statutory Estate | show 🗑
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| show | an estate in land in which ownership will last for an indeterminate duration
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| show | a type of property interest allowing tenants to occupy and use a property they do not own; contains a reversionary right
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| show | maximum ownership of real prop- erty; a.k.a fee or a fee simple absolute; it is of indefinite duration, freely transferable, and freely inheritable
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| show | type of freehold estate in which the person who has possession of the property is only able to hold the property until an event takes place o does not occur
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| show | a defeasible fee estate in which a grantor conveys a parcel of real estate subject to a condition of ownership; the grantor must go to court to assert their right to retake ownership (right of re-entry)
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| show | a defeasible fee estate that will come to an end automatically and immediately upon the occurrence of a designated event, the time of such occurrence being uncertain
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| show | an interest in real estate that will end upon the death of the life tenant or the pur autre vie life
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| show | a type of freehold life estate created by a deed or will that lasts for the duration of the tenant’s life
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| Legal life estate | show 🗑
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| Pur Autre Vie | show 🗑
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| Remainder | show 🗑
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| show | the portion of an estate that will return to the original grantor when a life estate has ended
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| show | refers to an estate wherein, upon the death of the life estate owner, full ownership reverts to the original fee simple owner; also known as a revisionary right
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| show | refers to recipient of the remainder, either the grantor who set up the life estate or a designated third party
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| show | a leased possession of property
for a certain, specific period of time; also known as a tenancy for years
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| Hereditament | show 🗑
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| show | describes the state of having an existing will at an individual’s time of death
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| show | describes the state of NOT having a will at an individual’s time of death
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| show | a party who makes a will
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| show | the gift of real property by will
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| show | a person who receives real property by will
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| show | a gift of personal property
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| show | the person receiving a gift of personal property
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| Alienation | show 🗑
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| Voluntary Alienation | show 🗑
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| show | transfer of title to property
without the owner’s consent, usually carried out by operation of law
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| Eminent Domain | show 🗑
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| Inverse Condemnation | show 🗑
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| show | involuntary transfer of title from an owner who does not use or inspect their land for a number of years to another person who has some claim to the land and takes possession
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| show | the final step in executing a real estate
transaction in which consideration is paid and own- ership of the property is transferred
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| Option money | show 🗑
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| Closing Costs | show 🗑
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| show | agreement to repay per the terms of the loan
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| Escrow | show 🗑
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| show | the representative of the title insurance company; usually conducts closing
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| show | the principle that something done today will be treated as if it were done earlier
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| Real Estate Settlement Procedures Act (RESPA) | show 🗑
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| Closing Disclosure | show 🗑
|
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| Deceptive Trade Practices Act (DTPA) | show 🗑
|
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| Earnest money | show 🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
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Created by:
jamesowens
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