General Mortgage Knowledge
Under a trust deed and note, what interests do the borrower and lender hold in the property which is used as collateral?
"Borrower - legal title, Lender - a lien
If an applicant works 40 hours a week and is paid $14.26 per hour, what is the applicant's average monthly income?
$2,471.73
The term "20 basis points" expressed as a percentage is:
0.20%
How much is charged for the up front mortgage insurance on an FHA loan (2012)?
1.75%
What type of loan never requires monthly mortgage insurance?
100% VA Loan
An active duty service person, or a veteran obtaining his/her second VA loan would pay what amount for the VA funding fee if they have less than a 5% down payment (2019)?
3.60%
What are the qualifying ratios on an FHA loan when manually underwritten?
31%/43%
An MLO is working with a borrower who wants to purchase a home using an FHA loan, what is the maximum LTV allowed on an FHA loan?
96.5% - borrower must put down 3.5%
A 5/23 or 7/23 is what type of mortgage:
A balloon payment
Which of the following would not be considered an example of an Alt-A loan?
A jumbo loan
An interest rate at PAR would be:
A par rate is the rate without the borrower using discount points to lower it or a YSP being paid to increase it.
On an FHA loan, which form of a gift is NOT allowed?
A seller gifts the down payment to the buyer
ALTA is the acronym for:
ALTA stands for American Land Title Association. A
FHA loans can be obtained by:
Anyone
When selling a home which has an FHA loan, when can the FHA loan be assumed?
Assumable loans allow for a borrower to assume a current mortgage generally with little to no change in terms (especially the interest rate) if approved by the lender. Both VA and FHA loans are generally assumable, and it is outlined in the loan closing documents.
With an FHA loan, which of the following is true concerning qualifying ratios?
Automated underwriting may approve a borrower with ratios higher than 29/41
Which of the following is not a type of payment option on a Reverse Mortgage?
Balloon
A 360/180 best describes what type of loan?
Balloon payment
CRV is the acronym for:
Certificate of Reasonable Value (appraisal for VA loans)
COFI is the acronym for:
Cost of Funds Index
Credit scores are determined by all the following EXCEPT:
Credit scores consider payment history, amounts owed/utilization, credit mix, new credit, credit inquires and derogatory marks (like bankruptcies and foreclosures)
A discount point is best described as a charge that the borrower pays to:
Discount points are the cost to lower a borrower's interest rate in exchange for an upfront fees
Two people obtain a loan and buy a home, taking ownership as joint tenants. Which of the following would NOT be true?
Each owns 100%
The legal right to use another's land for a specific limited purpose is called a(n):
Easment
A neighbor building their fence on a borrower's property would be considered a(n):
Encroachment
What prevents a party from having clear title?
Encumbrance
The amount by which an interest in property exceeds secured claims or liens is the borrower's:
Equity
FDIC is the acronym for:
FEDERAL DEPOSIT INSURANCE CORP
What loan requires an upfront mortgage insurance fee?
FHA
FHA loan limits change from time to time, and are based on the:
FHA Median House Prices
If a borrower comes in and is looking to do an FHA purchase. The MLO pulls their credit and discovers a Chapter 7 bankruptcy. How long in the past does that bankruptcy have to be discharged before the borrower can qualify for an FHA loan?
FHA allows borrowers with Chapter 7 bankruptcies that are seasoned for 2 years or more to obtain a loan. Conventional loans require 4 years of seasoning on Chapter 7 bankruptcies in most situations.
What is the name of Fannie Mae's automated underwriting system?
Fannie Mae's AUS is Desktop Underwriter or DU. Freddie Mac uses Loan Product Advisor or LP.
What is the name of Freddie Mac's automated underwriting system?
Freddie Mac's AUS is Loan Product Advisor, Fannie Mae uses Desktop Underwriter.
What is an unacceptable source of gift funds on an FHA loan?
From seller to borrower
FHA (Federal Housing Administration) loans fall under the control and guidelines of:
HUD
HELOC is the acronym for:
Home Equity Line of Credit
A loan officer suspects the Social Security number in an FHA application is incorrect. What must he/she do?
In this case, reaching out to the Social Security Administration to verify the SSN is correct
Which part of a monthly payment cannot change on a fixed-rate mortgage loan?
Interest
Which of the following statements about a VA loan is true?
It is possible for a veteran to have more than one VA loan at a time;
Another way to refer to non-conforming loans is:
Jumbo
In the mortgage business, what does the word "term" refer to?
Length of time on a loan
Which of the following is not an acceptable source for the borrower's down payment on a Fannie Mae loan?
Money from cash advance from credit card
Which is not included in debt-to-income ratio?
Monthtly Utilities
A person who brings a borrower and lender together is known as a:
Mortgage Broker
Interest rates for an FHA loan are set by:
No one sets interest rates; they are determined by the borrower's qualifications and the market.
Which of the following would keep a borrower from getting an FHA loan?
Not having a down payment
On which two documents would a Pre-Payment Penalty be disclosed?
Pg 1 of CD and LE
PUD is the acronym for:
Planned Unit Development
When a loan is immediately sold onto the secondary market, the responsibility of "funding" belongs to the:
Primary Lender
PITI is the acronym for:
Principal, Interest,Taxes, Insurance,
In an effort to become an informed borrower, each borrower should receive from the lender all of the following EXCEPT:
Real Estate Purchase Contract
A clause in a deed or a lease to real property that limits what the owner of the land or lease can do with the property is a(n):
Restrictive Covenant
SRP stands for:
Service Release Premium
Which disclosure is due within three business days of application?
Servicing Disclosure
New VA loans are available to:
Surviving spouse
The Homeowners Protection Act states that when a loan-to-value falls below 78% PMI is to be:
Terminated
A borrower wants to get an FHA loan, but they have defaulted on their federal student loan payment. Which of the following represents how the student loan default will be treated?
The borrower can never have defaulted on a student loan or be delinquent or in default on any other type of federal debt
When a borrower asks for an FHA loan, which of the following is true concerning the borrower's credit?
The borrower must pay off all court-ordered judgments before an FHA loan can close
On an FHA loan, the discount points can be paid:
The borrower/seller = max is 6%
What is a mortgage or deed of trust?
The document that creates a lien against the property
There are two main components of determining the interest rate on an ARM, which part of an ARM is set at the beginning and never changes?
The margin never changes
Alonzo is obtaining an USDA loan; he knows that he will have to pay an initial guarantee fee. He is purchasing the home for $150,000 and putting only the minimum down. What is the guarantee fee?
The minimum down payment on a USDA loan is 0%. That means the loan amount is $150,000. The initial guarantee fee is 1%. 1% of $150,000 is $1,500.
Which is not a credit reporting agency?
The three credit bureaus are Equifax, TransUnion and Experian. MGIC is a private mortgage insurance company.
An MLO has a borrower come in who is a veteran, the borrower is looking to obtain a VA loan. The borrower has never received a VA loan before and intends to put 0% down, what would be this borrower's funding fee?
This borrower has never used their entitlement before so would be eligible for first time use funding fees and since this borrower is putting less than 5% down, they would be required to pay the highest funding fee for first time use which would be 2.3%
The APR includes all fees that are required in order to get the loan. Not included is:
Title Insurance
The 1003 is which of the following?
Uniform Residential Loan Application
What is an unacceptable source of funds for down payment on a Fannie/Freddie Loan?
Unverifiable income
Which of the following cannot be escrowed?
Utility bills
Which type of loan application requires that a residual income analysis be performed?
VA Loan
The APR is the interest rate plus the finance charges computed and expressed as:
a rate
Which of the following is the most correct concerning a mortgage or deed of trust?
he mortgage or deed of trust is the security instrument that the borrower gives to the lender that protects the lender's interest in the property
USDA loans include a guarantee fee, what is the initial guarantee fee?
initial is 1% and the monthly is .35%.
How would you compute LTV?
takes a loan amount and divides it by the borrower's purchase price or the property's appraised value (whichever is lower
"
within 3 business days of closing