Extra Help!  Explanations






1.  Blanket Loan.  That’s just what it is.  A blanket loan is one that covers more than one property.


2.  Swing or Bridge Loan.  Think of it as helping you “swing” or “bridge” from the old house to the new house.  It is one loan that utilizes the equity in the old house, so therefore it is cheaper than paying on two mortgages.


3.  FHA 203B is used for a 1 to 4 family residence.


4.  The Mortgage and Deed of Trust are the two types of security document.  They are used to pledge real property as security for a loan.


5.  Promissory note (which is also referred to as the note) is the most commonly used.  A bond or I.O.U. also could be a money document.  The money document is used to create the loan, provides the terms of the loan and is the evidence of the debt.


6.  A Mortgage is a two party instrument; a Deed of Trust is a three party instrument.


7.  A Balloon Loan.  If a loan is only partially amortized, something is being paid towards the principal with every payment, but not enough for the loan to be paid off at the end of the loan term.  Therefore, the last payment has to be larger than the others to pay off that loan.  That would be a balloon payment, which makes this a balloon loan.


8.  A purchase money mortgage is owner financing.  It can also be called “Seller Takeback.”


9.  Graduated Payment Mortgage or GPM.  This is not an amortizing loan at first because nothing is being paid towards the principal.  In fact it has “negative amortization,” because the principal balance of the loan is going up instead of down.  Later on the payments will increase and it will become an amortizing loan.


10.  RESPA, the Real Estate SETTLEMENTS Procedures Act, has to deal with SETTLEMENTS.














1.  The Cost Approach, the Market Data Approach (also called the sales comparison approach) and the Income Approach.


2.  The Cost Approach will most likely give the highest estimate of value.  The steps in this approach are to estimate the value of the land as if it were vacant, then estimate the value of the replacement or reproduction cost of the improvements (anything man-made built onto the property) as if they were new, then take depreciation off of the improvements to match the current age or condition of the improvements, and finally add the depreciated value of the improvements to the value of the vacant land.  This last step will give you the total value of the property.


3.  The expectation of benefits in the future.  This is a principle of value.  Looking forward to the end of these quizzes is NOT an acceptable answer.


4.  The most widely used approach for residential re-sales is the Market Data or Sales Comparison Approach.  This approach can only be used effectively when there are comparable properties in the neighborhood that have sold in the recent past.  This is most likely to occur in a residential neighborhood.


5.  When you are using the gross rent multiplier, you multiply the MONTHLY rent times the gross rent multiplier.  You do NOT need to know the expenses.  If the yearly rent is $9600, then the monthly rent is $800.  800 x 110 is 88,000.










1.  Possession, Interest, Time and Title, remembered by the acronym PITT.  In order to have Joint Tenancy, all of these must be equal.  All owners have an equal right to possess the property.  They all have an equal interest, meaning they own the same percentage (Two owners each own 50%; four owners each own 25% and so on).  All of the owners got the property at the exact same time.  Everyone is on the same title or deed.  In Tenancy in Common, an owner could come in later on, and have a separate deed showing their interest in the property.  You can NOT have Joint Tenancy without all four of these.


2.  If the other owners won’t allow it, a Joint Tenant can go to court and file a partition suit.  The courts may allow them to sell off their share of the property.


3.  If you are missing ANYTHING in PITT (Possession, Interest, Time or Title), it’s Tenancy in Common.


4.  In Tenancy in Common, if one owner wants to get out, they can just sell off their share and the other owners can’t do anything about it.


5.  A and B still meet all the requirements for Joint Tenancy.  D is a Tenant in Common with the other two.  D came in later on, and would be on a separate deed, so they are missing Time and Title.


6.  Joint Tenancy has the right of survivorship, meaning when one owner dies, their share goes to the surviving or remaining owners of the property, so when C dies, his share is divided between A and B.  A and B remain Joint Tenants, each having 50%.


7.  If A and B are Joint Tenants, and B dies, A would get his share.  A would be the sole owner of the property.  Sole ownership is called ownership in severalty.


8.  I was getting bored, OK?!  It’s very important to pay attention to the order that things happen.  A, B, C & D are Joint Tenants.  First D sells his share to E.  E would be a Tenant in Common with the same 25% that D had.  A, B & C would still be Joint Tenants.  When A dies, his share would be divided evenly between B and C, who would now own 37½ percent each as Joint Tenants.  C sells his 37½% to F, who would be a tenant in common (since they came in later and are on a separate deed).  B also would be a tenant in common with everyone, because there are no other joint tenants remaining.  When B marries G, G does not automatically get a share of the property.  So to recap: B, E and F are Tenants in Common; E has 25%; B and F each have 37½ percent.


9.  If people are joint tenants before they get married, that does not change once they get married, unless they make a deliberate effort to change it.  Just remember, nothing changes when you get married.


10.  Probate is a legal process, which determines who will inherit a decedent's estate and what the estate's assets are.


11.  You can avoid the probate process for a specific property when you have a right of survivorship.  The right of survivorship is automatic.  When one owner dies, their share goes to the surviving owners, NOT THE SURVIVING FAMILY MEMBERS.  You could also have your body frozen until they find a cure for whatever killed you.