What is the exam-ready answer?
| Roadmap lesson | 71 of 500 |
|---|---|
| Official syllabus topic | Basic Real Estate Financing Concepts |
| Official PSI area | Financing |
| Published area weight | 10% of the 100-question national portion |
| Exam portion | National salesperson portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
| Last verified | August 2, 2026 |
The Rule
PSI publishes the weight for the complete content area, not a fixed question count for this lesson. Learn the rule well enough to apply it when PSI changes names, numbers, or parties in a new scenario.
Complete lesson
Read each concept as part of one decision system. The exam often gives one accurate statement and three statements that belong to a nearby concept.
Principal and interest
Principal is the amount borrowed or unpaid balance. Interest is the charge for using funds. The note states the rate, payment method, and maturity.
Equity and LTV
Owner equity is market value minus liens. LTV compares the loan to the lender's accepted value base and helps measure collateral risk.
Payments and reserves
PITI refers to principal, interest, taxes, and insurance. A lender may collect escrow installments for taxes and insurance in addition to principal and interest.
Mortgage markets
Primary-market lenders originate loans to borrowers. Secondary-market participants buy and sell existing mortgage loans or interests in them, supporting liquidity.
Decision rule
Georgia-specific distinction
Worked example
Scenario. A home is valued at $400,000 and secures a $320,000 loan.
Reason it through. LTV is $320,000 divided by $400,000. Equity before other liens is value minus debt.
Answer. LTV is 80%, and the owner's equity is $80,000.
Common exam traps
- Dividing value by loan for LTV
- Calling equity cash in a bank account
- Treating PITI as principal and interest only
- Assuming leverage removes risk
Original practice questions with detailed explanations
These questions were written for instruction and mapped to the current outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1A $270,000 loan finances a $300,000 value. What is LTV?
- A. 10%
- B. 30%
- C. 90%
- D. 111%
Show answer and explanation →
Answer: C. 90%
$270,000 divided by $300,000 equals 90%.
Question 2Where are loans originated directly to borrowers?
- A. Primary mortgage market
- B. Secondary mortgage market
- C. County plat office
- D. Appraisal board
Show answer and explanation →
Answer: A. Primary mortgage market
Primary-market lenders make loans to consumers; the secondary market trades existing mortgage assets.
Question 3What does amortization do?
- A. Schedules repayment over time
- B. Transfers title
- C. Changes zoning
- D. Eliminates interest
Show answer and explanation →
Answer: A. Schedules repayment over time
Amortization allocates scheduled payments to interest and principal over a repayment period.
Mastery tracking
Mark this lesson mastered only when every statement is true.
- State the direct answer and decision rule without notes.
- Explain every core concept in plain English.
- Solve the worked example after changing one important fact.
- Identify the Georgia distinction before reading answer choices.
- Answer all three questions correctly and reject every distractor.
- Repeat the topic in mixed practice on a later day.
Recommended next lesson
Continue with Mortgage Underwriting and Loan Qualification. Continue to roadmap lesson 72 and build on this decision rule.
Return to the Financing hub to see every official branch and the complete lesson sequence for this content area.