Finance Section
A buyer has a 30-year, $400k loan with a 7% interest rate. How much of the first month's mortgage payment is interest?
$2,333.33
A buyer with a $400k loan has a monthly principal and the interest payment of $2,661.21. If $2,333.33 is interest, what is the new principal balance after the first payment is applied?
$399,672.12
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. How many payments will the borrower make over the course of the loan?
180
David is an active duty member of the U.S. Air Force. Assuming he and the property meet the qualifications, which type of mortgage may be the best option for him? A. A conventional loan B. A Ginnie Mae-originated loan C. An FHA laon D. A VA-guaranteed loan
A VA-guaranteed loan
What is a loan origination fee? A. A fee a lender charges for processing a loan B. A fee a lender charges for servicing a loan. C. A fee a lender charges for servicing a loan. D. A fee a lender charges when a borrower pays off a loan
A fee a lender charges for PROCESSING a loan.
Which statement describes a conforming loan?
A loan that meets certain criteria that are accepted by Fannie Mae and Freddie Mac
When a buyer takes over the seller's original loan with the lender's permission, this is called?
An Assumption
A buyer is purchasing a property for $500,000. His lender's loan-to-value ratio is 90%. How much is the buyer financing? A. $400,000 B. $450,000 C. $50,000 D. $500,000
B. $450,000
What is one way that the FHA has helped to stabilize and improve the mortgage market?
By requiring appraisers to be state licensed or certified to evaluate property for FHA-insured loans.
Jarod has obtained an FHA loan for which he pays an annual mortgage insurance premium. How will he likely make this payment? A. He will make a seperate annual lump sum payment B. He will pay 1/12 of it monthly, separate from his mortgage payment. C. He will pay 1/12 of it monthly with his mortgage payment D. He will roll it into the cost of his loan
C. He will pay 1/12 of it monthly with his mortgage payment
Bindy received a loan based on the amount of equity she had in her house. She used this lump sum to fund her daughter's college education. What type of loan did she get. A. Conventional B. Convertible C. Home Equity D. Scholastic interest
C. Home Equity
Which of the following tells the lender how much entitlement the veteran has available under the VA loan program?
Certificate of eligibility
Monty retired 10 years ago and would like to see the world, but his retirement account won't support his desire to travel. Monty heard of a loan that would allow him to take advantage of the equity in his home by getting monthly payments from the bank by using his house as collateral. What is this type of loan called? A. Adjustable rate mortage (ARM) B. Home equity line of credit (HELOC) C. Home equity loan D. Reverse annuity mortgage (RAM)
D. Reverse annuity mortage (RAM)
The ____ was enacted in 2010 to create stricter regulation of the financial services industry to reduce costs for consumers from (for instance), undisclosed kickbacks
Dodd-Frank Wall Street Reform and Consumer Protection Act
With this common loan type, the home is used as collateral and the loan creates a second mortgage if the first mortgage hasn't been paid off
Home Equity
In a mortgage, the property is used as collateral for the loan. What's the term for the process of pledging something as collateral. A. Hypercollateral B. Hyperinflation C. Hyperventilatioin D. Hypothecation
Hypothecation
In California, how has state law modified the way the deed of trust works?
It creates a lien on the property, and the borrower, not the trustee, holds legal title.
Which type of Support does the USDA Rural Development Program offer to it's target audience of rural residents?
It offers direct loans, grants, and loan guarantees for housing and other rural needs, as well as advisor services to agricultural producers.
Tina is purchasing a home that appraised for $10,000 more than the sales price. On which figure will the lender base the loan-to-value ratio?
It will be based on the sales price.
Which of the following statements is true about usury laws in California?
Loans secured by real property and arranged for by a real estate broker are exempt from state usury laws.
Mick focuses on originating mortgage loans at a company that has in-house loan processors and underwriters. The options he offers consumers are limited to the products his company offers. What's Mick's position. A. Mortage banker B. Mortage broker C. Mortgage servicer D. Real estate investor
Mortgage Banker
Darrel loves working in the mortgage lending industry. On a daily basis, he works with multiple lenders to find and negotiate the best deals for his customers. What is Darrel's profession?
Mortgage Broker
Which of these names is also known as the California Real Property Loan Law
Mortgage Loan Broker Law
In the secondary market, how are mortgages grouped together and sold?
Mortgage-backed securities
Yancey purchased a home six months ago using a VA loan. Due to an inheritance, he is suddenly able to pay off his mortgage. Will he pay a pre-payment penalty.
No
What often comprises the sum total of a buyer's mortgage payment
PITI (Principal, Interest, Taxes, and Insurance)
In which market do lenders that originate real estate loans operate? A. Government Market B. Primary mortgage market C. Real Estate investment trust market D. Secondary mortgage market
Primary mortgage market.
Which of these provides some protection to lenders in the event that the borrower obtaining a conventional loan does not have a down payment of 20 to 25%?
Private Mortgage Insurance
Which of the following is a significant drawback to an FHA loan as compared to conventional financing?
Required mortgage insurance must remain in place for the life of the loan.
The Federal Housing Administration has a mission which includes _____ through the establishment of lending standards and by insuring mortgages. A. Controlling the use of the credit B. Encouraging all-cash transactions C. Reducing homeownership D. Stabilizing the mortgage market
Stabilizing the mortgage market
Borrowers who fall into the ______ category may be faced with paying interest 1% to 5% over the current market rate.
Subprime
Who holds the promissory note while it's being repaid
The Payee
How do the primary and secondary mortgage markets work together
The primary market packages loans to sell to the secondary market.
The Farm Credit System funds are acquired from ______
The sale of debt securities and international money markets
Lawrence is a buyer closing on a home purchase for which he's obtaining financing. He receives a Loan Estimate from his lender. What's the purpose of this document?
To detail the estimated closing costs for lawrences loan.
The purpose of the Seller Financing Disclosure Law is ______
To ensure that all parties are educated about loan terms and about who will be compensated for arranging credit.
Why does the federal government have agricultural lending programs?
To ensure that credit is available to agricultural producers, who often can't meet conventional underwriting standards due to the nature of their work.
What is the trustee's role when a deed of trust is used to secure property for a loan?
To hold legal title to the property on behalf of the beneficiary until the loan is repaid.
What's another term for back-end ratio
Total debt ratio
To be eligible for a ______, an applicant must have participated in farm or ranch management for at least three years.
USDA loan through the Farm Service Agency.
When a deed of trust is used as a security instrument, who holds the deed and the note? A. The lender holds the deed and the note B. The lender holds the deed, and the trustee holds the note C. The trustee holds the deed, and the lender holds the note. D. The trustee holds the mortgage and the note
C. The trustee holds the deed, and the lender holds the note
The Federal Housing Administration is part of the A. Consumer Finance Protection Bureau B. Federal Deposit Insurance Corporation C. MLO D. U.S. Department of Housing and Urban Development.
D. U.S. Department of Housing and Urban Development.
Mary is a licensed real estate professional. She only performs licensed real estate activities and does not receive any compensation from lenders, mortgage brokers, or other mortgage-related parties
No, she does not need an MLO endorsement if she only performs real estate activities and does not receive compensation from mortgage-related parties.