Real Estate — Finance, Valuation & Math flashcards
10 of 73 cards free to study here · 11 topics · the whole deck is built into Willys
Notes, mortgages and deeds of trust, loan types, PMI, points and APR, foreclosure, the secondary market, TILA and ECOA, the three appraisal approaches, and worked commission, proration, cap rate, LTV, area and tax math.
Learn deck · part of Real-estate salesperson license (national portion) · written against: National portion content common to Pearson VUE / PSI exams; state law excluded. Updated 2026-10-10.
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At closing a borrower signs both a promissory note and a mortgage. What does each document do?The promissory note is the borrower's personal promise to repay the debt; the mortgage (or deed of trust) is the security instrument that pledges the property as collateral for that promise.Mortgage Instruments
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What makes a mortgage conventional?It is not insured or guaranteed by a government agency such as FHA, VA or USDA; the lender's risk is covered by the borrower's equity and, at higher loan-to-value ratios, private mortgage insurance.Loan Types
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When does a conventional lender typically require private mortgage insurance?When the loan-to-value ratio exceeds 80 percent, meaning the borrower puts down less than 20 percent. PMI protects the lender, not the borrower.Loan Costs & Qualifying
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What is the key difference between judicial and non-judicial foreclosure?Judicial foreclosure goes through a lawsuit and court-ordered sale; non-judicial foreclosure uses a power of sale clause, usually in a deed of trust, so the trustee sells without court involvement. Which is used varies by state.Foreclosure
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What is the difference between the primary and secondary mortgage markets?In the primary market lenders originate loans to borrowers; in the secondary market those loans are bought, sold and pooled into securities, which replenishes lenders' money to lend again.Secondary Market
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How does an appraisal differ from a licensee's CMA?An appraisal is an unbiased opinion of value by a licensed or certified appraiser following USPAP; a comparative market analysis is a licensee's pricing analysis of sold, pending, active and expired listings to help set a list price or offer.Appraisal Principles
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In the sales comparison approach, whose price gets adjusted, the subject's or the comparable's?Always the comparable's. The appraiser adjusts each comparable's sale price to show what it would have sold for if it were like the subject.Sales Comparison Approach
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What is the cost approach formula?Land value + (cost new of the improvements − accrued depreciation). Land is valued separately as if vacant and is never depreciated.Cost Approach
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How do you get from potential gross income to net operating income?Subtract vacancy and collection loss to get effective gross income, then subtract operating expenses to get NOI.Income Approach
Watch out: do not deduct mortgage payments (debt service) or income-tax depreciation. -
A home sells for 400,000 dollars at a 6 percent commission, split 50/50 between brokerages. The selling agent receives 60 percent of the selling side. What does the agent earn?7,200 dollars. Total commission is 24,000; the selling side gets 12,000; the agent's share is 60 percent of 12,000.Real Estate Math
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About these cards
Review status: Second-reader reviewed, with corrections applied.
Checked against:
- Checked against the Truth in Lending Act and Regulation Z (12 CFR Part 1026), the Equal Credit Opportunity Act and Regulation B (12 CFR Part 1002), and the Homeowners Protection Act (12 U.S.C. 4901 et seq.); public domain U.S. government sources.
- VA home loan guaranty checked against 38 U.S.C. 3702, 3703 and 3729 and VA.gov's purchase-loan and Certificate of Eligibility pages; the market value definition against the interagency definition in 12 CFR 34.42(h); checked 2026-10-13; public domain U.S. government sources.
- Appraisal concepts checked against general USPAP terminology; all worked math computed by the author. No textbook or question-bank text copied.
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