California Real Estate Practice Exam

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Master the California Real Estate Exam with our comprehensive practice quiz. Get expert tips, detailed content review, and insider strategies to pass on your first try.

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What is a loan arrangement called that allows payments to be made to a seller who, in turn, continues to make payments on an existing loan?

Subject-to mortgage
Seller's second
Wraparound mortgage
Bridge loan

The correct answer is: Wraparound mortgage

A Subject-to mortgage involves the buyer taking over the seller's existing mortgage without having to get their own loan. This option does not involve the seller continuing to make payments on an existing loan. A Seller's second is a type of financing where the seller extends a loan to a buyer in order to supplement their primary mortgage. This does not involve the seller continuing to make payments on an existing loan. A Bridge loan is a short-term loan used to bridge a gap in financing, such as when a buyer needs funds to purchase a new home before their current home is sold. This does not involve the seller continuing to make payments on an existing loan. Therefore, the correct answer is C, a wraparound mortgage, as it involves the buyer making payments to the seller who then continues making payments on an existing loan, essentially "wrapping" the existing loan into the new one. This allows the buyer to purchase the property without having to qualify for a brand new loan.