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FIN 331 Real Estate

FIN 331 Real Estate. Phase 2 Exam Chapters 7 - 10 Fall 2103. Chapter 7 Valuation: Sales Comps vs. Cost. Concepts / Terms / Applications What is the purpose of an Appraisal? How do comparable properties fit into the appraisal process? How does uniqueness affect appraisals?

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FIN 331 Real Estate

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  1. FIN 331 Real Estate Phase 2 Exam Chapters 7 - 10 Fall 2103

  2. Chapter 7Valuation: Sales Comps vs. Cost • Concepts / Terms / Applications • What is the purpose of an Appraisal? • How do comparable properties fit into the appraisal process? • How does uniqueness affect appraisals? • What is meant by the following terms: • Market value • Replacement Cost • Reproduction Cost • How does market value differ from investment value? • How do supply and demand affect values?

  3. Chapter 8Valuation: Income Approach • Income, Capitalization, Investment Value • What does it mean when we capitalize income? • How does the capitalization rate affect investment value? • How does direct capitalization differ from the Discounted Cash Flow method to value investment property? • Define or explain the following terms: • Potential Gross Income (PGI) • Effective Gross Income (EGI) • Net Operating Income (NOI) • How does the vacancy rate affect EGI? • How does capital Expenditure affect NOI?

  4. Chapter 9R.E. Law and Contracts • General Considerations • Why do real estate transactions involve debt? • Why is debt financing attractive to investors? • What does loan amortization mean? • How does the principal portion of the monthly payment change over time vis-à-vis the interest portion? • What does it mean when your mortgage has a balloon payment? • What is a conforming loan? A jumbo loan? • What does it mean to escrow taxes and insurance? • What does it mean when a property is foreclosed? • What is a short sale?

  5. Chapter 10Mortgage Types, Borrower Decisions • Mortgage Markets • How does a primary market for mortgages differ from the secondary market? • What is a conventional mortgage? • Why are FHA/VA mortgages of interest to investors? • When is a home buyer most like to have to buy mortgage insurance? • What makes an Adjustable Rate Mortgage (ARM) risky for the borrower? Attractive to the lender? • What are Home Equity Loans? • When would it be a good idea to refinance a loan? • Who is most likely to use a reverse mortgage?

  6. Chapter 11Funding Residential Mortgages • What is disintermediation? How did it affect the Savings and Loan industry? • How is the Housing Expense ratio calculated? • How do lenders evaluate the risk of loan default? • What is the most profitable activity for mortgage bankers? • How do mortgage brokers differ from mortgage bankers? • What is a subprime mortgage? Who gets them? • What is loan underwriting? • What are the three “C’s”? • What is the mortgage pipeline timeline?

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