Exam (elaborations)
2024/2025 National PSI Broker Exam prep with Complete Solutions
- Course
- Institution
2024/2025 National PSI Broker Exam prep with Complete Solutions
[Show more]
Content preview
2024/2025 National PSI Broker Examprep with Complete Solutions
A borrower is using leverage on a new home loan at 90% loan to value. The
disadvantage of this type of leveraging is that
A)
the borrower is at higher risk of defaulting on the loan.
B)
it allows the borrower to pay less interest over the life of the loan.
C)
a larger down payment is required.
D)
there is rarely any requirement for PMI. - ANSWER-A)
The answer is the borrower is at higher risk of defaulting on the loan. Leverage is using
someone else's money; the higher the leverage, the higher the risk of default. Because
leveraging implies a high LTV, equity does not build faster, and the loan may require
private mortgage insurance (PMI) if there is a small down payment.
A broker can send the buyer or the seller to a title insurance company in which he is a
partner if he
A)
also provides the buyer or the seller with a list of other title companies.
B)
gives the buyer or the seller a written disclosure of the broker's relationship with the title
company.
C)
directs them to another real estate company.
D)
suggests they consult an attorney. - ANSWER-B)
The answer is gives the buyer or the seller a written disclosure of the broker's
relationship with the title company. Brokers must disclose their relationship with the title
company in writing. Once that is done, brokers are under no obligation to do anything
else. They do not need to provide a list of other title companies or suggest that an
attorney be consulted.
A broker is aware that a property near his new listing may have environmental
concerns. In this situation, the environmental issues
A)
do not need to be disclosed unless they are within the property's boundaries.
, B)
do not need to be disclosed because issues outside the neighborhood have no impact
on value.
C)
need to be disclosed because they can impact the value of the listing.
D)
need to be disclosed only if they are not obvious and would not be easy for a buyer to
discover. - ANSWER-C)
The answer is need to be disclosed because they can impact the value of the listing.
Environmental issues, both inside and outside of property boundaries, may impact value
and must be disclosed, no matter how obvious they are.
A broker is completing a CMA to determine the potential listing price of a seller's home.
Which of the following is NOT part of the final CMA given to the seller?
A)
Highest and best use evaluation
B)
Comparable sales analysis
C)
Adjustments to past sales
D)
Pictures of comparables - ANSWER-A)
The answer is highest and best use evaluation. An appraiser does a highest and best
use evaluation, which does not appear in a CMA.
A broker lists a property and begins marketing it. The seller sells the property to a
neighbor and upon closing pays the broker a full commission. What type of listing
agreement did the brokerage firm have with the seller?
A)
Open
B)
Exclusive agency with a "seller may not sell" contingency
C)
Exclusive right to sell
D)
Exclusive agency - ANSWER-C)
The answer is exclusive right to sell. Only an exclusive right-to-sell listing allows anyone
to sell the property and the broker will still get paid.
,A buyer and a seller enter into a purchase agreement. The agreement includes a
contingency that the buyer can terminate the contract if she cannot sell her current
home. This type of agreement is an
A)
executed contract.
B)
executory contract.
C)
option contract.
D)
unilateral contract. - ANSWER-B)
The answer is executory contract. Once an offer is accepted, it becomes an executory
(bilateral) contract until all the contingencies have been met and the contract is closed.
Once it is closed, it is an executed contract.
A buyer and the buyer's agent have looked at several residential properties. The buyer
wants to be able to run her business out of her home. The buyer has a property under
contract that has Residential-1 zoning. The buyer's agent should advise the buyer to
A)
check to see whether zoning will allow for the business use.
B)
seek a variance to create a special use for the business.
C)
apply for a special-use permit for a home office after closing.
D)
apply for a nonconforming use permit to grandfather in the business use. - ANSWER-A)
The answer is check to see whether zoning will allow for the business use. The broker
should suggest the buyer verify that the zoning on any property will allow for this type of
use.
A buyer chooses a loan with an LTV ratio of 90%, which requires the purchase of PMI,
instead of a loan with an 80% LTV, which would not require the insurance. The buyer
MOST likely made this choice because
A)
if the buyer defaults, PMI will protect the buyer by paying off the full loan.
B)
the buyer will make a larger down payment but have smaller monthly payments,
including PMI.
C)
paying PMI will mean that all mortgage payments and homeowners association fees are
deferred in case of default.
, D)
the buyer wants a smaller down payment, even though the buyer will have to pay PMI. -
ANSWER-D)
The answer is the buyer wants a smaller down payment, even though the buyer will
have to pay PMI. Buyers are willing to pay PMI (private mortgage insurance) in order to
bring a smaller down payment to closing, which will mean a higher monthly payment.
PMI protects lenders in case of default.
A buyer has requested that the seller give him a six-month opportunity to purchase the
seller's property for $400,000 with 10% down. The buyer has agreed to give the seller
$4,000 to hold the offer open for the next six months, with the seller keeping the $4,000
if the buyer decides not to purchase. The contract is
A)
an open listing agreement.
B)
an option agreement.
C)
an implied sales agreement with both parties bound.
D)
a bilateral agreement with both the buyer and seller bound because there was a
payment. - ANSWER-B)
The answer is an option agreement. An option is a unilateral agreement that sets the
sales price and terms but also gives the buyer the option not to buy the property. If the
buyer decides not to buy, an option contract does not allow the seller to sue (recourse).
In this case, the seller will keep the buyer's option money.
A buyer is getting a new mortgage with a 95% loan-to-value ratio. The final loan amount
the lender will lend the buyer is determined by the
A)
lower of the sales price or appraised value.
B)
higher of the sales price or appraised value.
C)
sales price only.
D)
appraised value only. - ANSWER-A)
The answer is lower of the sales price or appraised value. The loan-to-value (LTV) ratio
is determined by the lower of the sales price or appraised value.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller CLOUND. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79373 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now