The Lending Process

Jeremy has a monthly income of $2,000. His payment-to-income ratio is 1/4. How much is his monthly payment?

$500

The two primary classifications of properties that are evaluated by underwriters for loan approval are: The two primary classifications of properties that are evaluated by underwriters for loan approval are: leased and owned residential and commercial private and public raw and improved

residential and commercial

Which of the following is NOT one of the three steps to mortgage loan approval? pre-applicant final loan approval pre-approval pre-qualification

pre-applicant

A monthly payment includes: principal, interest, fees, and insurance principal, taxes, insurance, and prorations principal, insurance, taxes, and escrow principal, interest, taxes, and insurance

principal, interest, taxes, and insurance

Which of the following statements is NOT true about discount points offered by lenders? When it comes to discount points, it pays to shop around. Every discount point paid results in the same rate reduction percentage, whether it's the first point purchased or subsequent points. Most lenders will reduce the mortgage rate by 25 basis points (0.25%) in exchange for the payment of the first discount point. Each lender has their own pricing structure for discount points.

Every discount point paid results in the same rate reduction percentage, whether it's the first point purchased or subsequent points

Which of the following is NOT used by Desktop Underwriter for risk analysis? net worth proof of income source of funds FICO® Credit Scores

FICO® Credit Scores

The Loan Estimate form, required since the fall of 2015, takes the place of which forms? Good Faith Estimate and the initial Truth in Lending Disclosure Final Truth in Lending and Closing Disclosure Initial Truth in Lending and Closing Disclosure Good Faith Estimate and Closing Disclosure

Good Faith Estimate and the initial Truth in Lending Disclosure

Assets - Debts = Payment-to-Income Ratio Net Worth Credit Score Debt Service Ratio

Net Worth

What is the primary difference between pre-approval and final loan approval? The creditworthiness of the borrower is not considered until final loan approval. Borrower application information is not considered until final loan approval. Property information is not considered until final loan approval. The borrower is taken at their word in the pre-approval step.

The borrower is taken at their word in the pre-approval step.

What happens if a borrower's loan application is rejected by a CLO? The loan is rejected without further review. The borrower is offered a high-risk high-rate loan. The file goes to a live underwriter for review. The loan application is diverted to a secondary CLO to verify borrower criteria concerns.

The file goes to a live underwriter for review.

When the borrower receives a Loan Estimate: The lender has signaled approval of the loan application. The lender has delivered a counteroffer to the loan application. The lender has not yet approved or denied the loan application. The lender has signaled rejection of the loan application.

The lender has not yet approved or denied the loan application.

When you receive lender credits: You pay less upfront, but you pay more over time with the higher interest rate. You pay less upfront, but you pay more over time with the lower interest rate. You pay more upfront, but you pay less over time with the higher interest rate. You pay more upfront, and you pay more over time with the lower interest rate.

You pay less upfront, but you pay more over time with the higher interest rate

What is LTV? a ratio of interest to payment on a loan a ratio of debt to value of the property a payment made on the value of the property a payment made on an amortized loan

a ratio of debt to value of the property

Which of the following is NOT something that is typically paid for from the cash-to-close funds? transfer taxes underwriting fees title policy earnest money

earnest money

The underwriter making the loan decision will consider a borrower's: age, income, and marital status source of income, location of their current property, and credit score income, number of children, and age income, credit, and net worth

income, credit, and net worth

Requests for credit history can also be referred to as: inquiries a credit scan underwritings prequalifying checks

inquiries

Loan companies may not inquire about: employment verification martial status beyond asking if a borrower is married or single the net worth of the borrower the debts and credit score of the borrower

martial status beyond asking if a borrower is married or single

Brooke is in the mortgage industry. Primarily, she talks with buyers and helps them locate the right lender for their financial situation. Brooke is a: buyer's agent mortgage banker mortgage broker listing agent

mortgage broker

What is pre-approval? agreement between the lender and borrower that allows the borrower to secure the interest rate on a mortgage for a set time period an optional form used by mortgage brokers to communicate fees and make required disclosures to loan applicant(s) first step in the loan application process where lenders give prospective borrowers a general estimate of the loan amount to be approved official process of a borrower being approved by a lender to borrow a specific amount at an interest rate within a small range

official process of a borrower being approved by a lender to borrow a specific amount at an interest rate within a small range

Which of the following lists is comprised entirely of items that could influence a credit score? payment history, percentage of available credit used, and current unpaid debt current unpaid debt, job title, and new applications for additional debt applicant race, percentage of available credit used, and debt type/start date length of credit history, debt type/start date, and marital status

payment history, percentage of available credit used, and current unpaid debt

What does "covering the debt" mean? that a property will be able to anticipate its future debts and plan for eventual repayment that a property will be able to consistently produce the cash flows necessary to pay its debt obligations that a property will be able to find a tax shelter to "cover" or erase its year-end debts that a property will be able to get the financing needed to cover the cost of its present debt obligations

that a property will be able to consistently produce the cash flows necessary to pay its debt obligations

What are two concerns or risks that a lender faces regarding the appraisal they have done on a property? that the appraisal would be wrong from the beginning or that it would cause the borrower to demand a lower interest rate that the appraisal would be wrong from the beginning or that it would become invalid with a change in the real estate market that the appraisal would come in below competitor bank evaluations or that it would not accurately predict market movements that the appraisal was written with a borrower bias or that it ends up costing more than the financial risk would be without one

that the appraisal would be wrong from the beginning or that it would become invalid with a change in the real estate market

In order to determine whether or not to approve a loan, the underwriter needs to evaluate both: the borrower and the seller the borrower and the property the borrower and the lender the property and the market

the borrower and the property

Which of the following provides the BEST definition for pre-qualification? the first step in the loan application process in which lenders give borrowers a general estimate of an approved loan amount based on borrower-supplied info a document used to inform parties in a transaction in which the seller's real estate broker and buyer's mortgage broker are the same person or entity agreement between the lender and borrower that allows the borrower to secure the interest rate on a mortgage for a set time period official process of a borrower being approved by a lender to borrow a specific amount at an interest rate within a small range

the first step in the loan application process in which lenders give borrowers a general estimate of an approved loan amount based on borrower-supplied info

Once a buyer submits a loan application, how long does the lender have to provide them with the Loan Estimate disclosure form? three business days five days seven days five business days

three business days