10 Questions
A deed of trust involves two parties: the lender and the borrower.
False
In a conventional loan agreement, the lender cannot call in the loan if the borrower sells the property.
False
A promissory note used for a real estate transaction is always accompanied by a security instrument.
True
Compound interest is computed annually on the remaining principal balance of a real estate loan.
False
A mortgagor is not responsible for paying property taxes or maintaining property insurance.
False
When market interest rates increase, borrowers often choose to refinance to take advantage of the higher rates.
False
A deed of trust involves three parties: the lender, the borrower, and an independent trustee.
True
Conventional loan agreements usually contain a defeasance clause allowing borrowers to assume the loan on original terms.
False
A promissory note for a real estate transaction is frequently accompanied by a mortgage or a deed of trust.
True
When market interest rates decrease, borrowers often opt to refinance to benefit from the lower rates.
True
This quiz covers the basic provisions of promissory notes, negotiability, types of notes, security instruments like mortgages and deeds of trust, secured and unsecured creditors, foreclosure methods including judicial and nonjudicial options, and finance instrument provisions such as subordination and prepayment. Test your knowledge of real estate finance with a focus on promissory notes, security instruments, and foreclosure methods.
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