Section 4 Lesson 6 2

1. Question

What best describes an appraisal in a mortgage transaction?

A lender’s estimate of replacement cost

Correct Incorrect Correct answer

A homeowner’s opinion of value

Correct Incorrect Correct answer

An unbiased professional opinion of the value of a home

Correct Incorrect Correct answer

A credit report used to price the loan

Correct Incorrect Correct answer

2. Question

When is an appraisal typically used?

Only when a property is rented

Correct Incorrect Correct answer

Whenever a mortgage is involved in buying, refinancing, or selling the property

Correct Incorrect Correct answer

Only for cash purchases

Correct Incorrect Correct answer

Only for FHA loans

Correct Incorrect Correct answer

3. Question

Why does a lender require an appraisal when a property is pledged as collateral?

To confirm the borrower’s employment

Correct Incorrect Correct answer

To verify the borrower’s credit score

Correct Incorrect Correct answer

To establish the fair market value and identify negative factors affecting value

Correct Incorrect Correct answer

To determine the interest rate

Correct Incorrect Correct answer

4. Question

What is a key purpose of appraisals in underwriting?

To predict future appreciation

Correct Incorrect Correct answer

To set HOA dues

Correct Incorrect Correct answer

To provide a professional opinion of value for mortgage-related transactions

Correct Incorrect Correct answer

To confirm title is clear

Correct Incorrect Correct answer

5. Question

What is the Market Approach primarily based on?

Borrower income and expenses

Correct Incorrect Correct answer

Recent sales of similar properties

Correct Incorrect Correct answer

Construction costs minus depreciation only

Correct Incorrect Correct answer

Rent collected divided by cap rate

Correct Incorrect Correct answer

6. Question

Within what distance does the Market Approach typically study comparable sales?

Within 5 miles

Correct Incorrect Correct answer

Within the same county

Correct Incorrect Correct answer

Within a one-mile radius

Correct Incorrect Correct answer

Within the same school district

Correct Incorrect Correct answer

7. Question

What does the Market Approach do after reviewing comparable sales?

Applies an interest-rate adjustment

Correct Incorrect Correct answer

Ignores differences if the property is newer

Correct Incorrect Correct answer

Makes adjustments for differences between the properties

Correct Incorrect Correct answer

Uses NOI divided by the capitalization rate

Correct Incorrect Correct answer

8. Question

Which factor may require adjustments in the Market Approach?

Borrower’s debt-to-income ratio

Correct Incorrect Correct answer

Square footage, age/location, or amenities

Correct Incorrect Correct answer

Lender underwriting overlays

Correct Incorrect Correct answer

Mortgage insurance premium

Correct Incorrect Correct answer

9. Question

What is the Income Approach used for?

Estimating property value based on income the property generates

Correct Incorrect Correct answer

Estimating value based on replacement cost

Correct Incorrect Correct answer

Estimating value using comparable sales only

Correct Incorrect Correct answer

Estimating value using borrower income

Correct Incorrect Correct answer

10. Question

When is the Cost Approach typically used?

For condominium resales

Correct Incorrect Correct answer

For investment properties only

Correct Incorrect Correct answer

For older homes with major depreciation

Correct Incorrect Correct answer

For new construction properties

Correct Incorrect Correct answer

11. Question

What is the core idea behind the Cost Approach?

Value equals NOI divided by cap rate

Correct Incorrect Correct answer

Value equals the lowest sale within a mile

Correct Incorrect Correct answer

Value equals the borrower’s purchase contract price

Correct Incorrect Correct answer

Value should equal the cost to build an equivalent building

Correct Incorrect Correct answer

12. Question

In the Cost Approach, the market price for the property equals:

Cost of land plus cost of construction, less depreciation

Correct Incorrect Correct answer

NOI divided by cap rate

Correct Incorrect Correct answer

Comparable sales average plus adjustments

Correct Incorrect Correct answer

Contract price plus closing costs

Correct Incorrect Correct answer

13. Question

A borrower applies for a mortgage, and the appraiser determines the property’s value by comparing it to recently sold homes of similar size and condition in the same neighborhood.

A) The cost approach

Correct Incorrect Correct answer

B) The market data approach

Correct Incorrect Correct answer

C) The income approach

Correct Incorrect Correct answer

D) The replacement approach

Correct Incorrect Correct answer

14. Question

A loan file shows that an appraiser selected three comparable properties located within one mile of the subject property. Each comparable closed approximately eight months prior to the appraisal date.

A) Comparable properties must be active listings

Correct Incorrect Correct answer

B) Comparable properties must have closed within 30 days

Correct Incorrect Correct answer

C) Comparable properties must be closed within six to twelve months

Correct Incorrect Correct answer

D) Comparable properties may be located anywhere in the state

Correct Incorrect Correct answer

15. Question

A comparable property used in an appraisal contains more square footage than the subject property.

A) The comparable must be excluded

Correct Incorrect Correct answer

B) A negative adjustment must be applied

Correct Incorrect Correct answer

C) A positive adjustment must be applied

Correct Incorrect Correct answer

D) No adjustment is required

Correct Incorrect Correct answer

16. Question

The subject property includes a basement, but none of the comparable properties include a basement.

A) The basement is ignored

Correct Incorrect Correct answer

B) The appraisal must be cancelled

Correct Incorrect Correct answer

C) A negative adjustment must be applied

Correct Incorrect Correct answer

D) A positive adjustment must be applied

Correct Incorrect Correct answer

17. Question

A borrower asks when they must be informed of their right to receive a copy of the appraisal.

A) At loan closing

Correct Incorrect Correct answer

B) Within ten business days

Correct Incorrect Correct answer

C) Within three business days of application

Correct Incorrect Correct answer

D) After underwriting approval

Correct Incorrect Correct answer

18. Question

An appraisal is completed two days before a closed-end loan is scheduled to close.

A) The appraisal may be delivered after closing

Correct Incorrect Correct answer

B) The borrower must waive receipt

Correct Incorrect Correct answer

C) The appraisal must be provided promptly or three days prior to closing

Correct Incorrect Correct answer

D) Delivery is optional

Correct Incorrect Correct answer

19. Question

A borrower applies for a mortgage loan with an annual percentage rate that exceeds the Average Prime Offer Rate (APOR).

A) No appraisal is required

Correct Incorrect Correct answer

B) Only a verbal estimate is required

Correct Incorrect Correct answer

C) A compliant appraisal and borrower notice are required

Correct Incorrect Correct answer

D) The loan must be denied

Correct Incorrect Correct answer

20. Question

A lender fails to provide the borrower with a copy of the appraisal prior to closing.

A) No violation occurs

Correct Incorrect Correct answer

B) Only the appraiser is responsible

Correct Incorrect Correct answer

C) The lender violates disclosure requirements

Correct Incorrect Correct answer

D) The loan automatically cancels

Correct Incorrect Correct answer

20 graded questions

Quiz Summary

Information

Results

Results

Categories

1. Question

2. Question

3. Question

4. Question

5. Question

6. Question

7. Question

8. Question

9. Question

10. Question

11. Question

12. Question

13. Question

14. Question

15. Question

16. Question

17. Question

18. Question

19. Question

20. Question