PSI Virginia Real Estate Practice Exam

What is a common feature of all financing instruments listed?

1. They involve real estate transactions

2. They all require a down payment

3. They must be written contracts

4. They can only be issued by banks

The correct answer is: They involve real estate transactions

The common feature among all financing instruments listed is that they involve real estate transactions. Financing instruments such as mortgages, deeds of trust, and promissory notes are specifically designed to facilitate the purchase, refinancing, or improvement of real estate properties. Each of these instruments plays a crucial role in the transfer and financing of real estate, making their association with real estate transactions fundamental. While some financing instruments may indeed require a down payment, this is not universal across all of them, as terms can vary based on lender policies and specific loan scenarios. Additionally, while many financing instruments are indeed formalized through written contracts, there may be exceptions in specific cases, particularly in states with differing laws or when informal agreements are made. Lastly, financing instruments are not exclusive to banks; they can also be issued by credit unions, private lenders, or even individuals, broadening their availability beyond just traditional banking institutions. Thus, the involvement in real estate transactions is the definitive characteristic that encompasses all financing instruments listed.