National / General cheat sheet
Financing and Settlement Texas Real Estate Exam Cheat Sheet
Financing questions move from the borrower's promise and the security instrument to loan programs, federal consumer rules, lender requirements, and the documents used at settlement.
Identify the document or law before reading the numbers. The note is the promise to repay, the mortgage or deed of trust secures that promise, and federal disclosures explain the cost and terms.
What Pearson tests
- Notes, mortgages, deeds of trust, loan clauses, primary and secondary markets, and seller financing
- Conventional, FHA, VA, and USDA programs, LTV, mortgage insurance, and hazard or flood insurance
- TILA, Regulation Z, TRID, RESPA, ECOA, the Loan Estimate, Closing Disclosure, and settlement
Three traps to catch
- The promissory note is evidence of the debt. The mortgage or deed of trust is the security instrument.
- FHA insures qualifying loans and VA guarantees qualifying loans. Neither agency normally lends the purchase funds directly.
- RESPA prohibits kickbacks and unearned fees for settlement-service referrals. It does not ban every lawful payment for actual services.
Essential vocabulary
Financing and Settlement terms to know
- Promissory note
- The borrower's written promise to repay the debt.
- Deed of trust
- A three-party security instrument commonly used in Texas to secure repayment.
- Loan-to-value ratio
- The loan amount divided by the value used by the lender.
- Amortization
- Repayment of debt through scheduled installments that reduce principal over time.
- Discount point
- One percent of the loan amount, often paid in connection with the loan's pricing.
- RESPA
- The federal settlement law addressing disclosures, servicing, escrow, and prohibited referral payments.
- Closing Disclosure
- The TRID disclosure that presents final loan and closing terms for a covered transaction.
- Secondary mortgage market
- The market in which existing mortgage loans and related interests are bought and sold.
Check your recall
Can you answer these without notes?
1Which document contains the promise to repay?
The promissory note.
2What does one discount point equal?
One percent of the loan amount.
3Which law is associated with settlement-service kickbacks?
RESPA.
Use the sheet, then retrieve
Test the rules while they are still fresh.
Read the full lesson when a definition is fuzzy. Then answer the topic questions without looking back at this sheet.
Primary sources
This is exam-prep education, not legal, tax, or transaction advice. Confirm the current law, form, and official exam materials before relying on a rule in practice.