Section 23 unit 1 exam

What's the primary purpose of loan underwriting? A. To ensure that any secondary liens on the property will be repaid B. To ensure the validity of the borrower's financial information C. To protect borrowers from unscrupulous lenders D. To protect both lenders and borrowers from taking on loans that won't be repaid

To protect both lenders and borrowers from taking on loans that won't be repaid

When completing a loan application, applicants must list any items of value they own. What's another term for these items? A. Assets B. Disclosures C. Liabilities D. Net proceeds

Assets

Which of the following may a lender request to verify an applicant's work history and earning information? A. Account statement B. Debit card C. Loan application D. Pay stub

Pay stub or loan application

When a borrower is completing a loan application, items of value the borrower owns are listed in the ______ section. A. Assets B. Income C. Liabilities D. Net worth

assets

Which of the following may a lender request to verify an applicant's bank deposit information? A. Account statement B. Debit card C. Loan application D. Pay stub

Account statement

Which of the following net worth examples may a lender view most favorably? A. Assets are equal to liabilities B. Assets exceed liabilities C. Liabilities exceed assets D. The borrower has no assets

Assets exceed liabilities

Which party to the loan approval process is responsible for completing a loan application and supplying supporting documentation? A. Buyer B. Lender C. Seller D. Settlement agent

Buyer

Biff is completing a residential loan application. Which of the following would he include in the liabilities section? A. Amount on deposit at his bank B. Car loan C. House D. Stock holdings

Car loan

What factors does the underwriter consider in reviewing a mortgage loan application? A. Capacity, collateral, and criminal record B. Credit, capacity, and collateral C. Credit, capacity, and collections D. Credit, credentials, and collateral

Credit, capacity, and collateral

Select the statement that most accurately portrays the underwriting criteria for income-producing property. A. Investors can expect higher interest rates, shorter terms, and a lower maximum LTV ratio. B. Lenders look at a completely different set of criteria when underwriting investment loans than when underwriting primary residence loans. C. Loan terms and qualifying ratios are more favorable for investment properties than for primary residence loans. D. Loan terms for multi-unit investment properties are identical whether or not the borrower intends to occupy one of the units.

Investors can expect higher interest rates, shorter terms, and a lower maximum LTV ratio.

Borrowers must list their assets when completing a residential loan application. What are assets? A. Items of value a borrower owns B. Obligations a borrower owes C. The difference between a borrower's items of value and obligations D. Wages earned from employment

Items of value a borrower owns or The difference between a borrower's items of value and obligations

When a borrower is completing a loan application, obligations owed by the borrower are listed in the ______ section. A. Assets B. Income C. Liabilities D. Net worth

Liabilities

The Barbers are looking to purchase a new home for their family of four, but they'll need to be approved for a loan. What document will they need to complete to initiate their loan process? A. Closing Disclosure B. Loan application C. Loan Estimate D. Pre-qualification request

Loan application

Sara's mortgage lender has denied her loan. What happens now? A. Sara can appeal her lender's decision. B. Sara can apply with a different lender to see if she qualifies. C. Sara is prohibited from re-applying for her loan for a period of one year. D. Sara should ask the lender to re-evaluate her application using a manual process.

Sara can apply with a different lender to see if she qualifies.

How is pre-approval for a loan different from pre-qualification? A. Pre-qualification will assure sellers that the buyer has financing in place. B. Sellers will be more confident in the buyer's ability to obtain financing if the buyers have a pre-approval instead of pre-qualification. C. There is no significant difference between pre-approval and pre-qualification; the term used depends on the lender. D. You can easily get pre-approved by going online and answering a few questions, but pre-qualification is more onerous.

Sellers will be more confident in the buyer's ability to obtain financing if the buyers have a pre-approval instead of pre-qualification.

FHA financing is available for investment properties under which of the following circumstances? A. The borrower will live in one unit of the multi-unit property. B. The LTV ratio for the proposed property is under 25%. C. The property is made up of more than four units. D. The property passes an FHA inspection.

The borrower will live in one unit of the multi-unit property.

Naomi is completing a residential loan application. On the application, she lists her assets and liabilities so that her net worth can be determined. What's net worth? A. Items of value the borrower owns B. Obligations the borrower owes C. The difference between a borrower's items of value and obligations D. Wages earned from employment

The difference between a borrower's items of value and obligations

Which of the following is a benefit of automated underwriting? A. Allowances for special circumstances can't be made. B. It makes the process of underwriting much slower. C. There is a higher delinquency rate with loans processed automatically. D. There is no chance of personal prejudice entering into the decision.

There is no chance of personal prejudice entering into the decision.

Borrowers must demonstrate landlord experience in order to ______. A. Qualify for a lower interest rate B. Qualify for any type of investment loan C. Qualify for more favorable terms on any multi-unit property loan D. Use projected rental income to qualify for a Freddie Mac-eligible loan

Use projected rental income to qualify for a Freddie Mac-eligible loan

How would you advise a buyer client who's unable to make a 20% down payment on a home? A. Keep saving and get in touch with me when you're able to make the full down payment that's required when financing a real estate purchase. B. Look online for lenders that offer low down payment and no closing cost loans. C. Work with a mortgage broker or lender who can advise you on down payment assistance and loan programs. D. You can probably qualify for a loan program that requires a lower down payment, if you work with my friend Bob, who's a loan originator.

Work with a mortgage broker or lender who can advise you on down payment assistance and loan programs.