Real Estate License Flashcards

Questions and Answers

What does 'ad valorem' refer to?

A tax based on location.

A tax based on property size.

A fixed rate tax.

A tax based on the property's assessed value. (correct)

What is a capitalization rate?

It indicates the expected rate of return on a property.

What are Discount Points?

Fees paid to decrease the mortgage rate.

What does Equity in real estate refer to?

The amount received after paying off the mortgage upon selling the home. Signup and view all the answers

What is Escrow?

The deposit of funds with a neutral third party for carrying out an agreement. Signup and view all the answers

What is the Gross Rent Multiplier?

Market Value / Annual Gross Income. Signup and view all the answers

What is a Mill Rate?

The amount of tax payable per dollar of the assessed value of a property. Signup and view all the answers

What is Market Value in real estate?

The price at which property would sell. Signup and view all the answers

What is the Lender's Margin?

An amount added to the index rate on an adjustable mortgage. Signup and view all the answers

Study Notes

Tax and Financial Terms

Ad valorem: A property tax calculated based on the property's value, meaning "according to value."
Capitalization rate: A measure used to estimate the expected return on a property investment, reflecting how well the property will perform financially.
Discount points: Fees paid at closing to lower the mortgage interest rate, applicable when purchasing or refinancing a home.
Equity: The difference between a home's market value and the remaining mortgage balance, indicating the owner's share of the property.
Escrow: A financial arrangement where funds are held by a neutral third party until conditions of a contract are fulfilled.

Property Valuation and Income Analysis

Gross Rent Multiplier (GRM): A valuation method that evaluates rental income, calculated as Market Value divided by Annual Gross Income.
Mill rate: The tax amount due per dollar of assessed property value; expressed per $1,000, it varies depending on local taxation.

Mortgage and Financing Entities

Market Value: The estimated selling price of a property based on current market conditions.
Lender's margin: An additional percentage added to the index rate in an adjustable-rate mortgage, influencing overall mortgage cost.

Mortgage Market Players

Farmer Mac: A secondary market provider that specializes in agricultural loans, enhancing access to rural financing.
Fannie Mae: A government-sponsored entity that provides liquidity and stability in the mortgage market, primarily dealing with residential loans.
Freddie Mac: Similar to Fannie Mae, this government-sponsored enterprise buys mortgages on the secondary market to promote home ownership.
Ginnie Mae: A government corporation that guarantees securities backed by federally insured or guaranteed loans, ensuring timely payment to investors.

Description

Test your knowledge with these flashcards designed for the real estate licensing exam. Each card covers essential terms and definitions related to real estate. Perfect for anyone preparing for the licensing process!