Download Texas Principles of Real Estate 2: Glossary of Terms and Concepts and more Exams Nursing in PDF only on Docsity!
Amortization - - correct answers The liquidation of a financial obligation on an installment basis; also, recovery over a period of cost or value. Area - - correct answers Two dimensional surface of an object. Interest and how its calculated - - correct answers Total loan value * interest rate = Total Interest due Profit and Loss - - correct answers Profit - An amount over purchase price an item is sold for. Loss - An amount under purchase price an item is sold for. Percentage - - correct answers Per 100; out of 100. a rate, number, or amount in each hundred. Any proportion or share in relation to a whole. Calendar Year - - correct answers a period of 365 days starting from any date. Statutory Year - - correct answers A statutory year (also known as a banker's years) year is composed of twelve months each with thirty (30) days for a total of 360 days.
Volume - - correct answers the amount of space that a substance or object occupies, or that is enclosed within a container, especially when great. Texas Security procedures regarding calculators prior to State Real Estate Exam - - correct answers 1) Examinations are closed book; only 4 function calculator allowed
- Candidates are not allowed to bring any reference material with them
- Candidates must bring a non-programmable calculator which is silent, battery-operated, and does not have paper tape printing capabilities and does not have a keyboard containing the alphabet Texas Security procedures before or during State Examination - - correct answers 1) No conversing or other form(s) of communication among candidates is permitted once you have entered the examination area
- Children, pagers, and cellphones are NOT allowed in the examination center
- No personal items are to enter the testing center; personal items should be locked in the trunk of your car. only non-programmable calculator which are silent, battery operated and does not have paper tape printing capabilities and have not have a keyboard containing the alphabet are allowed.
- No smoking, eating, or drinking at the examination site, you may not exit the building during the exam, copying or communicating
Loan Point or Loan Discount Point - - correct answers Used by lenders to increase the lender's yield on the loan without increasing the annual interest rate. Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called "buying down the rate," which can lower your monthly mortgage payments. 1 point origination fee - - correct answers 1% of the loan amount; same across the industry Prorating - - correct answers allocate, distribute, or assess pro rata. What did an owner originally pay for his home if he sold it for $200,000, which yielded a 10% profit...? - - correct answers Take final sales price/1+rate/100 = what they originally paid for the home Frontage - - correct answers the facade of a building. a strip or extent of land abutting on a street or water. Identify the four classifications of appraisers, and accurately rank the classifications in order of experience. - - correct answers 1) Appraiser Trainee 2) State License Real Estate Appraiser 3) Certified Residential Appraiser 4) Certified General Real Estate Appraiser
Explain the five steps in the appraisal process, and accurately list the steps in the correct order. - - correct answers 1) State the problem - value to be estimated; purpose for the appraisal 2) list the data needed and the sources for that data; comparative and specific; universe of data 3) gather, record, and verify data; specific data 4 ) determine highest and best use of the property 5) estimate a value by each of the appraisal methods 6) Reconciliation - single sole value to represent the opinion value for the property usually followed up by a narrative which describes the property and why it is priced at said price. Discuss the differences between insured value, book value, assessed value, and market value, and provide at least one example of each. - - correct answers Insured Value - The cost of replacing a structure completely destroyed by an insured hazard. Book Value - The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated depreciation. Assessed Value - A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property. Market Value - The highest price in terms of money which a property will bring in competitive and open market and under all conditions required for a fair sale, i.e., the buyer and seller acting prudently, knowledgeably and neither affected by undue pressures.
Capitalization Rate - - correct answers The capitalization rate, often referred to as the "cap rate", is a fundamental concept used in the world of commercial real estate. It is the rate of return on a real estate investment property based on the income that the property is expected to generate. This metric is used to estimate the investor's potential return on his or her investment. Sales Comparison Approach (Market Data Approach) - - correct answers One of the three methods in the appraisal process. A means of comparing similar type properties, which have recently sold, to the subject property. Commonly used in comparing residential properties. Properties must be Close, Comparable, and Current.to property in consideration. Cost Approach - - correct answers One of the three methods in the appraisal process. An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land. Income Approach - - correct answers One of the three methods of the appraisal process generally applied to income producing property, and involves a three-step process
- Find net annual income
- Set an appropriate capitalization rate or "present worth" factor
- Capitalize the income dividing the net income by the capitalization rate Depreciation - - correct answers Loss of value of property brought about by age, physical deterioration or functional or economic obsolescence. Economic Life - - correct answers The period over which a property will yield a return on the investment over and above the economic or ground rent due to land. External Obsolescence - - correct answers A loss in value due to factors away from the subject property but adversely affecting the value of the subject property. Functional Obsolescene - - correct answers A loss of value due to adverse factors from within the structure which affect the utility of the structure, value and marketability. Replacement costs - - correct answers The cost to replace a structure with one having utility equivalent to that being appraised, but constructed with modern materials and according to current standards, design and layout.
Physical detriotation - - correct answers Impairment of condition. Loss in value brought about by wear and tear, disintegration, use and actions of the elements; termed curable and incurable. 4 keys in determining value - - correct answers DUST - Effective demand, utility, scarcity, transferability Effective demand - - correct answers The desire for possession or ownership backed by the financial means to satisfy that need. Utility - - correct answers The capacity to satisfy human needs and desires. scaracity - - correct answers The supply of property in relation to effective demand. a finite supply transferability - - correct answers The relative ease with which ownership rights are transferred from one person to another. Supply and demand - - correct answers The principle that states the value of a property will increase if the supply decreases and the demand will either increase or remains constant, and visa versa.
Principle of Conformity - - correct answers Holds that the maximum value is realized when a reasonable degree of homogeneity of improvements is present. Principle of Externalities - - correct answers The influences outside of a property can have a positive or negative affect on its value. Principle of Anticipation - - correct answers Affirms that value is created by anticipated benefits to be derived in the future. Increasing and diminishing returns - - correct answers Improvements to land and structures reach a point of its most potential which no longer have a positive effect on its value. Increasing returns are postivie until it reaches a point where additional improvements dont increase the value of a property. Once improvements reach a certain point or peak then we have the law of diminishing returns. Plot-age value - - correct answers the increased utility of value resulting from combining or consolidating two or more adjacent lots into one larger lot Principle of Contribution - - correct answers A component part of a property is valued in proportion to its contribution to the value of the whole. Holds that maximum values are achieved when the
- List the data needed and the sources of the data
- Gather, record, and verify all the necessary data in step 2 - very time consuming
- determining the highest and best use of the property
- value estimated from each of three appraisal methods
- Reconciliation - takes all three approaches and values and reconciles it into one single value. After all steps are completed, appraiser takes what he has learn and conveys that to the client. Where he gives his opinion and how he came to the appraisal value. Appraisal reporting - information actually sent to client - - correct answers 1) Opinion of value and date it was recorded
- The purpose on which the appraisal was done
- Description of the neighborhood and surrounding areas of the subject property - demographics
- Factual data with respect to each of the three appraisal methods; sales of recently sold similar properties
- Analysis and interpret the data collected
- Presentation with enough detail to state and prove his final number, with supporting documents and data points.
Insured Value - - correct answers The cost of replacing a structure completely destroyed by an insured hazard. Book Value - - correct answers The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated depreciation. Assessed Value - - correct answers A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property. Market Price - - correct answers The price paid regardless of pressures, motives or intelligence. IRV - - correct answers Income * Rate = Value List at least three examples of lenders who offer financing to residential buyers. - - correct answers Convential, FHA, VA Explain the difference between a balloon mortgage and term mortgage.
- correct answers Balloon is interest only to defer the principal until final payment is to be made. Term is fixed for length and generally has an amortization set over the life of the loan.
Negative Amortization - - correct answers Occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due. Convential Loan - - correct answers A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. The type customarily made by a bank or savings and loan association. PITI - - correct answers An acronym denoting that a mortgage payment includes principal, interest, taxes, and insurance. Loan to Value Ratio - - correct answers The relationship between the amount of a mortgage loan and the lender's opinion of the value of property pledged to secure payment of the loan. Private Mortgage Insurance - - correct answers Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan (PMI). Yield - - correct answers The interest earned by a bank on the money it has loaned.
Discount Points - - correct answers The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate. The amount is equal to the difference between the principal balance on the note and the lesser amount which a purchaser of the note would pay the original lender for it under market conditions. A point equals one percent of the loan. Loan Origination Fee - - correct answers The financing charge that a lender requires. VA Loan - - correct answers A loan made to qualified veterans for the purchase of real property wherein the Department of Veteran's Affairs guarantees the lender payment of the mortgage. Guarenteed Loan. FHA Loans - - correct answers Insured. 203b, 203h, Rehab loan - 203k Texas Loan Program - - correct answers TDHCA; two programs; Texas First-time Homebuyers program and Texas bootstrap program - http://tdhca.texas.gov/overview. Texas Veterans loans Federal Reserve System - - correct answers The federal banking system of the United States under the control of central board of governors (Federal Reserve System) involving a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation.
Ginnie Mae - - correct answers A nickname for the Government National Mortgage Association (GNMA), a U.S. government agency that purchases FHA and VA mortgages. Truth in lending - - correct answers The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to insure that prospective borrowers and purchasers on credit receive credit cost information before entering into a transaction. Real Estate Settlement Procedures Act (RESPA) - - correct answers A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development. Creditor - - correct answers A person to whom a debt is owed. Annual Percentage Rate - - correct answers The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act. Adjustable Rate Mortgage (ARM) - - correct answers A mortgage loan which bears interest at a rate subject to change during the term of the loan, predetermined or otherwise.
Subsidy Buydown - - correct answers Funds provided usually by the builder or seller to temporarily reduce the borrower's monthly principal and interest payment. Home Equity Loan - - correct answers A loan against the equity in a home. Wrap around mortgage - - correct answers A financing device whereby a lender assumes payments on existing trust deeds of a borrower and takes from the borrower a junior trust deed with a face value in an amount equal to the amount outstanding on the old trust deed and the additional amount of money borrowed. Construction Loan - - correct answers A loan made to finance the actual construction or improvement on land. Funds are usually dispersed in increments as the construction progresses. Sale and leaseback - - correct answers A financial arrangement where at the time of sale the seller retains occupancy by concurrently agreeing to lease the property from the purchaser. The seller receives cash while the buyer is assured a tenant and a fixed return on buyer's investment. Explain the concept of a deed restriction, and provide at least three examples of a deed restriction. - - correct answers Restriction which are put on a property to abide by certain rules or restrictions to live in a
