FIRE 305 Principles of Real Estate Third Examination Fall Semester 2014 PRINT AND SIGN YOUR NAME 1 A buyer can afford no more than 550 per month in payments The most favorable loan available in the market is a 30 year loan at 9 What is the maximum affordable house with a 10 down payment a 67 112 b 74 569 c 79 975 d 81 636 2 A lender makes a 95 000 mortgage at 8 5 interest with monthly payments for 25 years How much principal will be repaid during the fourth year of the loan a 9 180 b 1 481 c 1 376 d 7 699 3 A real estate investment is expected to return to its owner 3 700 per year for 16 years after expenses At the end of year 16 the property is expected to be sold for 49 000 Assuming the required rate of return is 14 for investments with this degree of risk what is the net present value of this property if the purchase price is 30 000 today a 798 b 27 949 c 113 d 27 210 4 A borrower is offered a mortgage loan for 120 000 with an interest rate of 10 and a 30 year amortization period with monthly payments The lender charges four discount points What is the effective interest rate a 10 b 9 c 10 49 d 10 24 5 You are buying a 162 000 house with a 20 down payment and a fixed rate mortgage for the remainder at 8 75 for 30 years with monthly payments What is the balance or amount outstanding on the loan at the end of the fourth year a b c d 125 333 08 136 666 35 135 390 67 146 326 89 6 In a promissory note which clause calls for all payments being due immediately in the case of default a defeasance b acceleration c due on sale d prepayment 7 In most cases real estate is purchased by means of a a secured loan b cash c an unsecured loan d None of the above 8 In the event of mortgage default FHA insured loans provide protection for the a borrower b seller c lender d FHA 9 Which of the following categories account for the largest portion of all mortgage credit in the United States a 1 4 family residential b Multifamily residential c Commercial d Farm 10 Unlike FHA loans VA loans are backed by a title insurance b mortgage insurance purchased by the borrower c mortgage insurance paid for by the federal government d a guarantee program backed by the federal government 11 Which of the following organizations was created specifically to improve the housing finance system following the Great Depression of the 1930s a Government National Mortgage Association b Federal Home Loan Mortgage Corporation c Federal National Mortgage Association d Federal Housing Administration 12 The percentage of a borrower s gross monthly income required to meet monthly housing expenses only is called the a mortgage debt ratio b total debt ratio c loan to value ratio d income to debt ratio 13 Given a loan applicant s gross income of 2 500 a mortgage payment of 600 car payment of 250 property tax of 90 insurance of 30 an allowable total debt ratio of 36 and an allowable mortgage debt ratio of 28 the applicant would qualify by a the mortgage debt ratio only b both the mortgage debt and total debt ratios c the total debt ratio only d neither ratio 14 Students of real estate should study factors that influence demand at the national regional community and neighborhood levels because a each of these factors affect the value and marketability of individual parcels of real estate b Americans should broaden their focus c upcoming activity in the U S Senate may alter the political landscape d All of the above 15 Which of the following factors may help determine a community s comparative advantage a Transportation and education facilities b Labor force and community leadership c Climate and natural resources d All of the above 16 In a space market with an upward sloping supply function an increase in demand for space would be met with a an increase in equilibrium price b a decrease in equilibrium price c no change in equilibrium price d stagnant deflation 17 Which of the following serves as an indicator of the balance between supply and demand in a market a Vacancy rate b Rent levels c Construction starts d A and b above 18 Transactions involving the transfer of rights to use real estate are said to occur in the a real estate space markets b real estate asset market c real estate development industry d real estate system 19 The development industry tends to add new space to the real estate system when a values in the asset market are greater than or equal to cost of production including normal profits to the developer b rents in the space market fall below normal occupancy levels c suppliers of space demand higher returns on their investments net of costs d the months supply indicator rises above normal levels 20 A shopping center anchored by a grocery store and constructed in a strip style is most likely classified as what type of shopping center a Neighborhood b Specialty c Community d Regional 21 Which of the following is not true with regard to market analysis of a proposed shopping center a Consumers travel much further for certain types of purchases b 60 70 of sales are generated in the secondary trade area c The site must be selected before the primary and secondary trade areas can be identified d Given an adequate market the location of the proposed site is generally regarded as the most important determinant of success of a proposed shopping center 22 All of the following describe the market for office towers EXCEPT a it depends upon the level of business activity b it is usually situated in or near the Central Business District c it is strongly tied to white collar employment d it is primarily determined by travel costs 23 Which type of shopping center is most likely to be built in the strip style a Neighborhood b Community c Regional d Super regional 24 A developer contemplating the construction of a shopping center must recognize that a a new center will always succeed b one does not need to analyze the status of the competition c a new center can do little to create business d a new center cannot create supply 25 A central business district is series of buildings constructed along streets in the center of town a an unplanned minor b a planned major c an unplanned major d a planned minor 26 The most important consideration in the selection of shopping center sites is a size and shape b utilities c location and access d topography and drainage 27 The total floor area in a shopping center designed for occupancy by tenants is the a total square footage b net leasable area c gross leasable area d net …