Finance practice exam 4
$6,750 The buyer is financing $450,000. Multiply this amount by 1.5% (or 0.015) to get $6,750.
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 1.5%?
180 The borrower will have 180 payments (assuming the loan isn't paid off early). This is 12 monthly payments per year for 15 years: 12 x 15 = 180.
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. How many payments will the borrower make over the course of the loan?
Judicial
A lender is pursuing a deficiency judgment against a borrower in California. Which foreclosure process is being used?
75% Lenders use the lesser of the sales price or appraised value. This results in an LTVR of 75%.
Glenn is purchasing a home for $400,000. The property appraised at $415,000 and Glenn is financing $300,000. What's the loan-to-value ratio?
The "L" indicates that the creditor pays the item at consummation.
Maria is a borrower reviewing her Closing Disclosure. She notices that the appraisal fee is listed under "Paid by Others" and has an "L" listed with the amount. What does this mean?
Yes, she can claim a deduction based on the amount of her home she uses for business.
Mavis uses an extra bedroom in her home as her office. Can she claim this as a deduction?
Market indices approved by the FHA
The interest rate on an FHA Section 251 loan is adjusted based on ______.
Partnership between mortgagors (borrowers)
What type of partnership is a cooperative?
Partnership between mortgagees (lenders)
What type of partnership is a real estate mortgage investment conduit?
Alienation clause (requires permission from lender)
Albert wants to sell his house to his cousin, who's willing to assume the loan. What clause in Albert's mortgage requires him to obtain the lender's permission to do this?
Municipal
An industrial development bond is a variety of _____ bond.
Opportunity cost
Analyzing spending habits allows you to evaluate the impact of a purchase in terms of ______.
After an initial low rate, her payments may increase beyond the level of affordability.
Barb is considering a refinance. She wants to stick with a conventional loan. Why might she be wary of an introductory rate?
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Betty is purchasing a home and has received Loan Estimates from three lenders. As she compares the terms of the loans being offered, where can she find the section that allows her to make comparisons between loans with different interest rates?
No, because this doesn't constitute a discussion of real estate.
Bill makes sure to say "real estate, real estate, real estate" when he takes his friends to lunch. "We discussed real estate," he says. "Now I can write the meal off on my taxes." Is this true?
Listed according to who paid them: borrower, seller, or other
Closing costs are itemized on page two of the Closing Disclosure and all amounts are ______.
Title II, Section 203(n)
Dana and Phil have evaluated their situation, and have decided to purchase a unit in a cooperative housing project. Which FHA loan program might work for them?
A CalHFA loan product
Danny and Wendy recently relocated to California. They are buying a three-bedroom home in an established neighborhood where they look forward to raising a family. Their real estate agent, Brunhilda, thinks that their income, which is on the low side, and the property could make them eligible for ______, which would offer reduced, fixed interest rates on a loan.
Median price for the area and property type
FHA county loan limits are based on ______.
Housing ratio
Front-end ratio is another term for ______.
By creating a secondary market for agricultural loans, making it possible for agricultural lenders to fund more loans
How does Farmer Mac support agricultural producers?
Distributes grant funding to help meet community needs as determined by state and local governments
How does the Community Development Block Grant program assist in supporting HUD's mission?
A cost estimate must be provided prior to loan approval, and repairs are approved by an FHA inspector when completed.
How does the FHA control the use of 203(k) money loaned for repairs to a home?
Covered events
If you have a specific health issue, which of the following is most critical for you to thoroughly investigate when selecting health insurance?
One year
In a judicial foreclosure, if the sheriff's sale wasn't enough to pay off the borrower's debt plus foreclosure costs, how long does the borrower's redemption period last?
The consumer's lender
In a residential real estate sale involving a federally related loan, who's required to provide Real Estate Settlement Procedures Act disclosures to the consumer?
$50,000
John uses the VA home loan to purchase property. His mortgage is $200,000. Then, two years later, John defaults on his loan. How much will the VA reimburse the lender?
Estimate gross income less business deductions and apply tax rate
Kris is a self-employed individual getting ready to pay his quarterly estimated taxes. How should he come up with his estimated payment?
Stan (the seller)
Melanie is a buyer who has agreed to purchase Stan's property using a contract for deed. Who holds legal title to the property during the term of the loan?
Corporate bond
Memoryjet, Inc has developed a new technology for high-volume jump drives. In order to manufacture their new devices they will need to gear up a new production line, which will cost about $85 million. What kind of bond instrument could they use to help secure the funds they need for their new line?
Yes, the smaller Special Housing Adaptation grant may be used to adapt a home owned by a family member where the eligible veteran lives.
Molly's father has a service-related disability. He lives with Molly and her family in a home that she owns. Can funds from a VA specially adapted housing grant be used to modify Molly's home to accommodate her father's disability?
Industrial development bond
Mortgage revenue bonds are a variety of what other type of bond?
Repossessed homes
Natalie is a licensee who assists buyers in the purchase of HUD ______ when they're listed for sale.
Fall within the FHA mortgage limit for the area where the property is located.
On an FHA 203(k) loan, the combined cost of home value and rehab must ______.
Mortgage payment
Remembering the acronym PITI can help borrowers recall what makes up their _____________.
Premiums and deductibles
Ronald marries and wants to start a family. Which of the following would be important in his selection of an insurance carrier?
Presenting a loan offer to a consumer for acceptance
Scott is an MLO. Arthur, his assistant, does not have an MLO endorsement. Which of these activities must be performed by Scott?
Yes, Sissy can apply to have her entitlement restored and can buy a second house using a VA loan.
Sissy is a veteran who used her full entitlement to purchase a home. The loan has since been paid off, and Sissy still owns the home. Now, she'd like to buy a second home using another VA loan. Is Sissy allowed to do this?
Farmer Mac
The Federal Agricultural Mortgage Company (FAMC), created in the late 1980s, is more commonly known as _________.
Mortgage Foreclosure Consultant Law
The ______ defines individuals who perform certain foreclosure-related activities for compensation for borrowers.
The end-of-year loan balance, plus the balance after the next 11 payments
The annual MIP is recalculated each year using ______.
Capital gains
Tina just sold her investment property. She'll have to pay a transfer tax as well as recapture her depreciation. What other tax will apply?
Basic facts related to the transaction and property, including a legal description
What information does Schedule A of a title commitment provide?
To avoid going over the conforming loan limit
What's one reason a borrower would choose a split—or piggyback—loan option?
FHA financing
When George is working with buyers who can't afford a large down payment, he recommends that they look into ______.
The trustee executes and records a deed of reconveyance, and the lender returns the note to the borrower.
When a borrower has paid off the loan, how is the release handled if the security instrument is a deed of trust?
The note is endorsed and the mortgage is assigned.
When a mortgage is sold, how is the transfer made?
The lesser of the sales price or appraisal value
When calculating loan-to-value ratios, which of the following will be used by the lender?
Savings account deposits
When completing a loan application, the applicant must list their assets. Which of these is considered an asset?
Schedule B-1
Where can a party reviewing a title commitment find requirements that must be met before a title insurance policy will be issued?
The American Taxpayer relief Act of 2012
Which act made some mortgage insurance premium deductions available to certain taxpayers?
Satisfaction of mortgage
Which mortgage-related document is the equivalent of the deed of reconveyance used with a deed of trust?
That any issues that arose in the previous title search have been resolved
Which of the following assumptions does the Torrens system make?
Property lot size
Which of the following is a piece of specific data an appraiser may gather?
36,000 $300,000 x .02 = $6,000 per transaction, multiplied by six transactions = $36,000.
You're estimating your annual income and find that the average sale price of a home in the area you'll be working is $300,000. You determine your expected commission is 2%, and you plan to make six transactions in the year. Assume there is no broker's split. What will your estimated income for the year be?
The buyer could lose the property after missing only one mortgage payment.
Which of the following is a potential concern of a buyer who's entering into a contract for deed with a seller?
Because it accommodates a variable income better than a traditional financial plan does
Why are real estate licensees encouraged to use a personal financial plan that allocates a percentage of income to expenses and savings goals?
Contributions to a SEP IRA are pre-tax contributions.
Which of the following is a true statement about an IRA?
It's available in the 18 states with the most underwater homeowners.
Which of the following is a true statement about the "hardest hit fund"?
The principle of substitution means that people won't pay more for a property than they have to
Which of the following is true regarding value?
Rising home price
Which of the following made mortgages attractive investments?
The timeline for the loan repayment may be extended.
Which of the following should be taken into account when considering refinancing a mortgage loan?
Twelve district banks comprise the Fed.
Which of the following statements is true about the Federal Reserve?
A triplex purchased as a primary residence
Which of the following types of properties may be eligible for purchase by Freddie Mac?
It allows you to track business expenses for tax purposes.
Which of these is an advantage to maintaining business and personal accounts separately?
Personal website
Which of these is an optional ongoing expense for a licensee?
Mortgage Loan Broker Law
Which of these names is also known as the California Real Property Loan Law?
Hybrid REIT
Which type of Real Estate Investment Trust derives its income from rent or sale of property and interest dividends?
It offers direct loans, grants, and loan guarantees for housing and other rural needs, as well as advisor services to agricultural producers.
Which type of support does the USDA Rural Development program offer to its target audience of rural residents?
Asking an appraiser to remove information about adverse property conditions from an appraisal report
Which of the following actions toward an appraiser would be considered improper?