Minnesota State Real Estate Practice Test

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Study for the Minnesota Real Estate Exam. Use flashcards and multiple-choice questions with hints and explanations. Get exam-ready efficiently!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What role does the FHA primarily serve?

A mortgage lender
An insurance company
A government agency
A real estate investor

The correct answer is: An insurance company

The Federal Housing Administration (FHA) primarily serves as an insurance company in the context of mortgage lending. It provides insurance to lenders against the risk of default on loans made to borrowers, primarily for residential properties. This insurance enables lenders to offer loans to borrowers who might not qualify for conventional financing due to lower credit scores or smaller down payments. By acting as an insurer, the FHA helps to promote homeownership by making it easier for individuals to access financing. This role stabilizes the housing market and encourages lenders to extend credit to a broader range of borrowers. The FHA does not directly lend money, nor does it operate as a government agency in a traditional regulatory sense, nor does it engage in real estate investment. Its specific function is centered around providing mortgage insurance to ensure that the lenders can safely lend funds for home purchases.