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National PSI Exam Prep Questions with Complete Solutions Graded A+
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National PSI Exam Prep Questions with Complete Solutions Graded A+
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National PSI Exam Prep Questions andComplete Solutions Graded A+
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? - Answer: Highest and best use evaluation. /
An appraiser does a highest and best use evaluation, which does not appear in a CMA.
Houses in the local area have had an increase in sales price and a decrease in days on the market. A
broker who is attempting to determine the current market value for a residential listing would get the
BEST estimate of value by using - Answer: comparables that are no more than six months old. / In a
changing market, the more recent the comparables, the more likely they are to reflect upward or
downward price changes.
Rental rates have increased by 2% in the last six months. Which appraisal principle BEST explains this
rate increase? - Answer: Principle of supply and demand. / The principle of supply and demand states
that as fewer properties become available for rent or sale, the price owners can charge will increase.
The current monthly GRM in a neighborhood is 200, and the annual income is $24,000. What is the
estimated value of a property in this neighborhood? - Answer: $400,000 Monthly GRM × monthly
income = value. 200 × 2,000 ($24,000 ÷ 12) = $400,000.
The subject property has two baths and one fireplace. The property across the street sold for $181,000
and has two baths and two fireplaces. The property behind the subject sold for $175,000 and has two
baths and no fireplace. In the area, baths are worth $5,000 and fireplaces are worth $3,000. What is the
subject property worth? - Answer: $178,000. / Subject PropertyComp 1$181,000Comp 2$175,0002
baths2 bathsno adjustment2 bathsno adjustment1 fireplace2 fireplaces- $3,000No fireplace+
$3,000Adjusted price$178,000Adjusted price$178,000
According to federal government lending regulations, a buyer purchasing a home must have an appraisal
for all the following types of financing EXCEPT - Answer: Seller carry. / All government loans and any
sold on the secondary market require an appraisal. A seller-carry loan, or seller financing, may or may
not require an appraisal.
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 - Answer: the buyer wants a smaller down payment, even though the buyer will have 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 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 - Answer: 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 difference between using a partially amortized loan or an interest-only term loan is that the partially
amortized loan would result in - Answer: larger payments and a smaller balloon payment. / In a partially
amortized loan, the loan payments include a partial payment toward principal. While the payments will
be larger, the balloon payment will be smaller, due to some principal payoff. With an interest-only loan,
the original principal and the final balloon payment are the same because there was no payment made
toward the principal.
A borrower is using leverage on a new home loan at 90% loan to value. The disadvantage of this type of
leveraging is that? - Answer: 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 property owner has a large amount of equity in his home but does not want to sell it to gain access to
his money. What type of loan could the owner use to access the equity in his home without having to
make monthly loan payments? - Answer: Reverse mortgage. / In a reverse mortgage, the lender makes
payments to the borrower each month. There are requirements such as age and equity in the property
for this type of loan.
A lender in first position filed documents to initiate foreclosure on a property. The borrower offered to
give the lender a deed in lieu of foreclosure. If the lender accepts the deed in lieu, which of the following
is TRUE? - Answer: The lender will take title subject to any junior liens. / The foreclosure process
removes all liens, but if a lender takes a deed in lieu of foreclosure, any junior liens are still attached and
would become the obligation of the lender. There is no reason to continue the foreclosure process
because the lender will become the owner and title policies find encumbrances but do not release them.
A seller has agreed to act as the buyer's bank. The seller and the buyer signed a contract for deed to
help the buyer purchase the seller's home. When will the buyer receive possession and title? - Answer:
Possession is received as agreed to in the contract, and title is received upon making the final loan
payment. / A contract for deed is a type of seller financing in which the seller holds the deed/title until
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