Financing Exam Questions
A buyer has a 30-year $400,000 loan with a 7% interest rate. How much of the first month's mortgage payment is interest?
$2,333.33 $400,000 x 0.07 = $28,000 $28,000/12 = $2,333.33
David is buying a home for $400,000 and financing 90% of it. If his lender charges a 1% loan origination fee, how much will the lender charge to originate the loan?
$3,600 400,000 x .9 = 360,000 360,000 x .01 = 3,600
A buyer is purchasing a property for $400,00. His lender's loan-to-value ratio is 80%. How much is the buyer financing?
$320,000 400,000 x .8 = 320,000
A buyer with a 30-year, $400,000 loan at a 7% interest rate has a monthly principal and interest payment totaling $2,661.21. If $2,333.33 is interest, how much is applied to principal?
$327.88 $2,661.21 - $2,333.33 = $327.88
A buyer with a $400,00 loan has a monthly principal 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 If $2,333.33 of the $2,661.21 is interest, that leaves $327.88 for principal. Subtract $327.88 from $400,000 for a new principal balance of $399,672.12
A buyer is purchasing a property for $500,000. He has a down payment of $50,000 and is financing the rest. What's the amount of the loan origination fee if the lender charges one-and-a-half points?
$6,750 450,000 x .015 = 6,750
Margo is purchasing a home for $520,000. The property appraised at $550,000 and Margo is financing $416,000. What's the loan-to-value ratio?
0.8 Lenders use the lesser of the sales price or approved value. The results in an LTV ratio of 80% (416,000/520,000)
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 VA-guaranteed loan
Which of the following describes total debt ratio?
A calculation that looks at all recurring (or installment) debt, such as monthly mortgage, car, credit, and loan payments, as a percentage of the borrower's monthly gross income. Total debt (or debt-to-income) ratio is the borrower's monthly debt obligation as a percentage of their monthly gross income
Borrowers obtaining a VA loan aren't required to have a down payment. However, they are required to pay_____.
A funding fee
With which type of mortgage does the interest rate vary according to a specified index?
Adjustable rate
Bill's loan is secured by a mortgage. Who holds legal title when this security instrument is used?
Bill The borrower holds legal title to the property that secures the loan when a mortgage instrument is used.
Which type of loan is commonly used for the purpose of building improvements?
Construction loan
Farmer Mac is an entity that ______ for agricultural property loans, rural utility loans, and certain loans guaranteed by the U. S. Department of Agriculture.
Creates a secondary market
In a mortgage, the property is used as collateral for the loan. The process of pledging something as collateral is referred to as ______.
Hypothecation
Brittany is a real estate licensee with a mortgage loan originator endorsement. When she acts as an MLO, the California Real Property Loan Law requires her to give her clients a disclosure that ______.
Informs the prospective borrowers about the terms of the loan being offered The Mortgage Loan Disclosure Statement informs the borrower about the terms of the loan being offered. The licensee must deliver this disclosure to the prospective borrower within three business days of receiving a loan application
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 Lenders use the lesser of the sales price or appraised value to determine LTV ratio. The amount Tina puts down won't affect which of these figures the lender uses.
What info is listed on the promissory note?
Loan amount and schedule of repayment
In the secondary market, mortgages are grouped together and sold as ______.
Mortgage-backed securities Mortgage that are packaged together and sold on the secondary market, often to investors, are called mortgage-backed securities.
Which clause is standard in a deed of trust and affects the foreclosure process that can be used if the borrower defaults?
Power of Sale
Scott is an MLO. Arthur, his assistant, does not have an MLO endorsement. Which of these activities must be performed by Scott?
Presenting a loan offer to a consumer for acceptance
Amy purchased a new home and obtained financing through a bank, called Natula Bank, located in her city . Natula originated the loan, but before Amy's first mortgage payment was due, it sold her loan to CitiMortgage. As a loan originator, what market is Natula Bank operating in?
Primary mortgage market Lenders that originate loans operate in the primary mortgage market.
Since the FHA was established, it has taken strategic action to stabilize the mortgage market. Which of these items is one of the FHA's strategies?
Reduce lender risk by establishing borrower qualification standards
A loan that's offered based on a homeowner's equity in which funds are drawn over time and the bank gains corresponding property ownership is called a ______.
Reverse annuity mortgage This is reverse annuity mortgage, or RAM
Which type of lender specializes in taking savings deposits and then lending money out to consumers through mortgage and other loans?
Savings and loan Thrifts, or savings and loan associations, specialize in taking in savings deposits and then lending out to consumers through mortgage and other loans
______ make homeownership available for many who otherwise could not qualify for a mortgage loan.
Subprime lenders
Bart is selling his home and has accepted an offer from a buyer, who's obtaining a VA loan. The sale price is agreed upon and is in the purchase contract. Then Bart receives a call from his agent, explaining that the buyer is hoping that Bart will lower the sale price because ______, and there is a risk the buyer will not be able to get the VA loan as a result.
The VA appraiser completed the CRV and it is less than the sale price.
A "homes for sale" magazine contains the following ad: "Cozy two-bedroom starter home, neat and clean, ready for move-in. $140,000. Low down payment and easy financing!" Which of these statements is true?
The ad is in compliance with TILA (Truth in lending act) because it doesn't contain any of the trigger terms that require full disclosure of all financing terms. Regulation Z requires all financing terms to be included in an ad only if certain trigger terms are present, but "low down payment and easy financing" are not triggers.
The FHA has helped to significantly improve the mortgage market through ______.
The introduction of the long-term amortized loan
Which of the following is a true statement about U.S. Department of Veterans Affairs loans?
The loan that's guaranteed will be based on either 100% of the sales price or 100% of the CRV, whichever is less
which of the following is a property requirement for CalVet loans?
The property must be owner-occupied
Which of the following statements is true about national lending intuitions?
They sell packaged loans to investors National lending institutions package loans and sell them to investors. This creates additional funds to purchase more loans from the primary market.
Robin has great credit and was able to secure a loan for her ocean-side dream home. Her 30-year, fixed-rate loan is for an amount that's above conventional loan limits. What type of loan does Robin have?
a non-comforming loan
Shelly's flower business is blooming and it's time for her business to grow. She plans to take out a business loan to open two more shops on the north side of town. Which lending institution would she most likely go to for the loan?
commercial bank
Which of the following is an example of a government-sponsored enterprise (GSE)?
fannie mae Fannie Mae, Freddie Mac, and the Federal Home Loan Bank are examples of GSEs.
With this type of loan, personal property is included with the real property in the sale. It's commonly seen in commercial real estate, but you may also see this in the sale of furnished condominiums.
packaged mortgage
From a lender's perspective, the lower the credit score, _______.
the higher the risk
When a deed of trust is used as a security instrument, who holds the deed and the note?
the trustee holds the deed, and the lender holds the note. With a deed of trust, the lender receives the promissory note; the trustee holds the deed of trust
the purpose of the seller financing disclosure law is
to ensure that all parties are educated about long 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.