North Carolina Real Estate Practice Test (Free)

Question 1

What does loan-to-value (LTV) ratio measure in mortgage lending?

Accepted Answer

The loan amount compared to the appraised value or purchase price of the property

Answer

The length of the loan term in years

Answer

The borrower's monthly debt compared to income

Answer

The interest rate compared to the national average

Question 2

In a fixed-rate amortizing mortgage, how does the proportion of principal versus interest in each payment change over the loan term?

Accepted Answer

Early payments are weighted more toward interest, and later payments are weighted more toward principal

Answer

Early payments are entirely principal, with no interest until the final year

Answer

The split is random each month based on market rates

Answer

It stays exactly the same every month

Question 3

In real property, what distinguishes a fixture from personal property?

Accepted Answer

Whether it is permanently attached to and intended to remain with the real property

Answer

Its purchase price

Answer

Whether it was purchased before or after closing

Answer

Its brand name

Question 4

What is the general effect of a contingency clause in a real estate purchase contract?

Accepted Answer

It makes the contract's performance conditional on a specified future event, such as financing approval or a satisfactory inspection

Answer

It guarantees the buyer's financing

Answer

It removes the need for a title search

Answer

It voids the contract immediately upon signing

Question 5

In agency law, what is a fiduciary duty that a broker generally owes to their client?

Accepted Answer

The duty to act in the client's best financial interest and with loyalty

Answer

The duty to represent both parties equally in every transaction

Answer

The duty to waive their commission if asked

Answer

The duty to guarantee the sale price

Question 6

In North Carolina, what does the term 'fee simple' describe in real property ownership?

Accepted Answer

The most complete form of ownership, with the fewest limitations on use and transfer

Answer

A leasehold interest with a fixed term

Answer

A life estate that ends when the holder dies

Answer

An easement granted to a neighboring property

Question 7

For a real estate contract to be valid, which element must generally be present along with offer and acceptance?

Accepted Answer

Consideration exchanged between the parties

Answer

A notarized signature on every page

Answer

A licensed broker as a party to the contract

Answer

An appraisal completed before signing

Question 8

What does the legal term 'encumbrance' refer to in real property?

Accepted Answer

A claim, lien, or restriction that affects the title or use of a property

Answer

A type of mortgage with a fixed rate

Answer

The physical boundary markers of a lot

Answer

An appraisal report attached to the deed

Question 9

What is the main purpose of an appraisal in a real estate financing transaction?

Accepted Answer

To provide the lender with an independent estimate of the property's market value

Answer

To confirm the buyer's credit score

Answer

To calculate property taxes

Answer

To draft the purchase agreement

Question 10

What is an easement in real property law?

Accepted Answer

A right to use another person's land for a specific purpose without owning it

Answer

A type of mortgage lien

Answer

A government zoning classification

Answer

A form of property tax exemption