PSI National Exam Questions and

1

PSI National Exam Questions and Answers | Latest Version | 2025/2026 | Correct & Verified

What is the primary function of the Federal Reserve System in the U.S. economy?

• To regulate insurance premiums

✔✔B) To manage the money supply and maintain economic stability

• To establish property tax rates
• To oversee the real estate market

What does the term “capital gain” refer to in investment?✔✔A) The profit from the sale of an asset like real estate or stocks

• The initial investment amount made in real estate
• The interest earned from a savings account
• The depreciation value of an asset

What is the difference between a “direct” and “indirect” real estate investment?

• A direct investment involves buying stocks of real estate companies
• An indirect investment is always a form of partnership 1 / 4

2

✔✔C) A direct investment involves purchasing physical property, while an indirect investment involves buying shares or interests in real estate ventures

• A direct investment is less risky than an indirect investment

What does the term “loan-to-value ratio” (LTV) measure?✔✔A) The ratio of the loan amount to the appraised value of the property

• The percentage of the property’s value the borrower is required to pay upfront
• The total amount of equity in a property
• The rate at which a loan’s interest is adjusted

What is a "federally insured mortgage"?✔✔A) A mortgage that is backed by the U.S. government through programs like FHA or VA

• A mortgage that guarantees full loan repayment in case of default
• A mortgage that only applies to commercial real estate properties
• A mortgage that requires the borrower to have military service

What is the purpose of an "escrow account" in real estate transactions?✔✔A) To hold funds or documents for safekeeping until certain conditions are met 2 / 4

3

• To pay for the buyer’s closing costs
• To assess the property’s market value
• To provide a loan to the buyer

What is the role of the "real estate commission" in a transaction?

• To determine the selling price of a property

✔✔B) To provide compensation to agents for facilitating the sale of property

• To verify the condition of the property being sold
• To provide insurance coverage for the property

What does “title insurance” protect the buyer from?✔✔A) Financial loss due to defects or problems with the property’s title

• Loss from fire or theft during the transaction
• Property damage that occurs during the sale process
• Disputes between the buyer and seller over the sale price

What is a "short sale" in real estate?✔✔A) When a homeowner sells the property for less than the amount owed on the mortgage 3 / 4

4

• A sale involving a property that has been recently renovated
• A sale that is completed in less than 30 days
• A sale where the seller agrees to accept a lower commission

What is a “deed of trust”?

• A document that shows the final price of a real estate transaction

✔✔B) A legal document that secures a loan by transferring the title to a third party until the debt is repaid

• A clause in a contract that establishes payment terms
• A contract that releases ownership of the property

What is the purpose of a “real estate appraisal”?✔✔A) To determine the market value of a property

• To evaluate the condition of the property for tax purposes
• To verify the income potential of the property
• To assess the buyer’s ability to repay the loan

What is the difference between “amortization” and “interest” on a mortgage?

• / 4