18/19 Practice Questions

Seth is a licensee working for buyer Britney, in a Cary, North Carolina transaction. Britney wants to make sure the seller accepts her offer on a charming Cape Cod-style home, so she tells Seth she wants to make a full-price, non-contingent offer right away. How should Seth respond? "I highly recommend a home inspection contingency with your offer to protect yourself in the event there are major defects with the house." "Since you love this house, this is the best way to make sure you get it. Let's write up the offer and send it over right now." "Your offer may be more attractive if we come in at $5,000 over the list price." "Your offer would be more attractive if it were all cash."

"I highly recommend a home inspection contingency with your offer to protect yourself in the event there are major defects with the house."

Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyer's appraisal came in at $300,000. On what number will the buyer's lender base the loan-to-value ratio? $249,000 $299,000 $300,000 There's no way to tell given the data provided.

$300,000

Once the closing date has been scheduled, agent Valerie will need to send Chip and Joanna's earnest money to the closing attorney no earlier than ______ the settlement meeting. 10 days after 10 days prior to Five days from One day before

10 days prior to

The Davidsons' lender is trying to approve them for a conventional loan. What is the minimum percentage of total debt ratio they must have to be eligible a conventional loan? 36% 37% 38% 39%

36%

Which range of credit scores represents subprime borrowers? 0-100 250-300 580-669 740-799

580-669

Seller Dougie knows that his home was built in 1969. This means that potential buyers have the right to conduct a lead-based paint inspection. This type of inspection should be completed by _______. A certified and licensed lead-based paint inspector A certified home inspector Dougie's agent The buyer's agent

A certified and licensed lead-based paint inspector

Cary is buying a home with a septic system and asks his agent how to properly inspect it. Which of the following is true? A licensed inspector conducts different types of tests, including a visual inspection and a drainfield test. It's not necessary to inspect the septic system. The home inspector handles it. The seller handles it.

A licensed inspector conducts different types of tests, including a visual inspection and a drainfield test.

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 conforming Freddie Mac loan A government loan An FHA loan A non-conforming loan

A non-conforming loan

What is an annual percentage rate? A standardized measure for interest rates and other costs of the loan Fees charged by a lender, expressed as a percentage The amount a borrower pays in interest for a single year The amount a lender can collect in interest from a borrower during a single year

A standardized measure for interest rates and other costs of the loan

What is a triggering term? A fee charged by a lender, expressed as a percentage A standardized measure for interest rates and other costs of the loan A way to establish loan terms that lenders must follow A word or phrase that, when used in advertising, requires the disclosure of all of the terms of a loan

A word or phrase that, when used in advertising, requires the disclosure of all of the terms of a loan

To which of the following borrowers might a lender be most likely to recommend an FHA loan? An investor who intends to use equity in another investment property as his down payment A retired couple interested in downsizing from a large four-bedroom house they own free and clear to a condominium A single stockbroker with a $40,000 down payment and significant assets in a stock portfolio A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores

A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores

Which of the following provides a summary of the title history? Abstract of title Chain of encroachments Survey Title insurance policy

Abstract of title

Who usually acts as a closing attorney? An attorney who may or may not be the lender's attorney The broker The lender The seller

An attorney who may or may not be the lender's attorney

How does the lender determine whether the property is worth the sales price? Appraisal Demographics of the area Prior history with borrower Style of home

Appraisal

The Equal Credit Opportunity Act is regulated by the ______. Civil Rights Commission Consumer Financial Protection Bureau Department of Justice Federal Deposit Insurance Corporation

Consumer Financial Protection Bureau

Home inspector Murray is explaining to first-time buyers what he looks for during a home inspection. What is his primary goal? Document health and safety issues that may affect both the cost and enjoyment of the home. Estimate how much cosmetic upgrades may cost the buyers. Verify lot lines and acreage calculations. Verify the presence of any easements or encroachment on the property.

Document health and safety issues that may affect both the cost and enjoyment of the home.

During his final walk-through, buyer Gabe discovered that the toilet had begun to leak and the seller "repaired" the leak with duct tape. What can Gabe do? He can delay the closing until the seller makes appropriate repairs. He can have it repaired after closing and then invoice the seller. He can sue the seller for fraud. Nothing; it's too late to do anything about it before closing.

He can delay the closing until the seller makes appropriate repairs.

Jason has secured an agreement from a lender to lend him the money he needs to buy a house. This agreement is a ______. Financial settlement Loan commitment Loan estimate Promissory note

Loan commitment

Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step? Complete a loan application. Obtain a pre-qualification letter. Sign a purchase agreement. Write an offer.

Obtain a pre-qualification letter.

Carrie and Doug are buying a house on 20 acres of beautiful forested land at the base of Mt. Rainier. They're about to hire a home inspector. They have friends who own a home in the area that's had issues with carpenter ants, and they want to make sure the home is free and clear of them. Which of the following is a true statement? A licensed home inspector may inspect for but not report on wood-destroying organisms. Both a licensed home inspector and a licensed structural pest inspector are qualified to inspect for and report on wood-destroying organisms. Only a licensed home inspector may inspect for and report on wood-destroying organisms. Only a licensed structural pest inspector may inspect for and report on the presence of wood-destroying organisms.

Only a licensed structural pest inspector may inspect for and report on the presence of wood-destroying organisms.

In order for the spousal support Kayla receives to be considered in the lender's income evaluation when Kayla applies for a home loan, what must be true? Payments must have been received for at least one year, and must be expected to continue for at least three more years. Payments must have been received for at least three years, and must be expected to continue for at least one more year. Payments must have been received for at least three years, and must be expected to continue for at least three more years. Payments must have been received for at least two years, and must be expected to continue for at least two more years.

Payments must have been received for at least one year, and must be expected to continue for at least three more years.

North Carolina homebuyer Faye has had her offer accepted, and is now in the due diligence period defined by the purchase contract. What is this period intended to allow her to accomplish? Allow the seller to vacate the property. Allow the settlement agent to prepare the closing documents. Dig into the seller's finances for potential bargaining chips. Prepare her financing and investigate the condition of the property.

Prepare her financing and investigate the condition of the property.

Sophie only has 15% to put down on her new home. What might the lender require in order for Sophie to obtain conventional financing? A co-signer A letter of reference A mortgage insurance premium Private mortgage insurance

Private mortgage insurance

Buyer Abby wants the seller to make some repairs. In this type of case, _______ will be essential when negotiating who will cover the cost of repairs. High estimates Low estimates Playing hardball Reliable estimates

Reliable estimates

Brenda knows that home purchasers file more lawsuits because of property conditions present at the time of purchase than for any other reason. What should Brenda's stance be on home inspections? Home inspections aren't really necessary, because the seller's disclosures will tell what is wrong with the property. It's really up to the buyers whether or not they want a home inspection. She should encourage her clients to have any property thoroughly inspected prior to the purchase. She should not take a stance one way or another on home inspections.

She should encourage her clients to have any property thoroughly inspected prior to the purchase.

In some cases, a home inspector will identify an issue that a ______ needs to evaluate. Broker Lender Seller Specialist

Specialist

In order for earnings from a second or part-time job to be considered as part of a lender's income evaluation, what must be true? The applicant must have been employed for at least one year, and the employment must be expected to continue. The applicant must have been employed for at least six months, and the employment must be expected to continue. The applicant must have been employed for at least three years, and the employment must be expected to continue. The applicant must have been employed for at least two years, and the employment must be expected to continue.

The applicant must have been employed for at least two years, and the employment must be expected to continue.

When would a lender require a mortgage insurance premium? The borrower has an FHA mortgage. The borrower is unable to put at least 20% down on a conventional loan. The borrower is unable to put at least 25% down on a conventional loan. The borrower wishes to lower his interest rate on a loan.

The borrower has an FHA mortgage.

Who is responsible for obtaining a home inspection? The buyer The lender The seller The title insurance company

The buyer

Who is responsible for obtaining an appraisal? The buyer The buyer's agent The lender's attorney The seller

The buyer

Who's generally responsible for ordering and reviewing a survey of the property? The buyer The lender The seller The title insurance representative

The buyer

What would happen if your client's rate lock expires three days prior to closing? Nothing, there is a three-day grace period after the date of the lock expiration. The interest rate lock can be extended by paying an additional fee. The interest rate will revert to the current rates. The interest rate will revert to the rate at the time of the application.

The interest rate will revert to the current rates.

What value would the lender use to calculate loan-to-value ratio? Appraised value Interest Sales price The lower of the sales price or appraised value

The lower of the sales price or appraised value

What's used to calculate the loan-to-value ratio? Appraised value Down payment Sales price The lower of the sales price or appraised value

The lower of the sales price or appraised value

Marshall is a home inspector who is walking the lot of the property he's inspecting with a survey in hand. Which of the following will he note as an encroachment on the inspection report? A path providing neighborhood access to a pond cuts through part of the subject property. The apple tree on the adjacent property drops apples onto the subject property. The city seized the neighboring property to be used in a street widening project. The neighbor installed a basketball hoop next to his driveway, six inches over the property line.

The neighbor installed a basketball hoop next to his driveway, six inches over the property line.

Which of the following statements is true about septic systems? There are many different types. They differ in the way they are installed. They do not require inspection. They do not require maintenance.

They differ in the way they are installed.

What is the purpose of the Truth in Lending Act? To better educate consumers about the cost of credit or obtaining a loan To establish loan terms that lenders must follow To require borrowers to disclose specific information to lenders To set strict restrictions on the amount of interest a lender may charge for a loan or credit

To better educate consumers about the cost of credit or obtaining a loan

What's the purpose of the title search? To collect evidence that the title is a marketable title, meaning it's clear and free of encumbrances To ensure the current owner has the title to give to the buyer To ensure the title is on the record To insure the owner against any financial loss due to a defect in the title

To collect evidence that the title is a marketable title, meaning it's clear and free of encumbrances

Claudia is buying a property with a well. The EPA recommends testing wells annually for microorganisms, and once every ______ for harmful chemicals and elemental contaminants. Few months Seven years Two to three years Year

Two to three years

Your buyers are going through due diligence on an older home in Hendersonville they hope to purchase with wooden beams throughout. You notice that there a lot of small holes burrowed in the beams. This could indicate the existence of what kind of pest? Fire ants Flies Wood-boring beetles Wood wasps

Wood-boring beetles