Question: Which statement about a conventional loan is FALSE?

Answer Options: A. It’s insured by a government agency. B. It can be conforming or nonconforming C. It can be set up as a 15-year loan D. It can have an adjustable interest rate

Answer: A. It’s insured by a government agency.

Question: Minerva has a stable monthly gross income… What is the maximum monthly PITI payment?

Answer Options: A. $2,080 B. $2,100 C. $2,155 D. $2,275

Answer: B. $2,100

Question: A promissory note that is secured by a mortgage is:

Answer Options: A. a defeasance agreement B. a guarantee of payment C. primary evidence of the debt D. security for the loan

Answer: C. primary evidence of the debt

Question: When applying for a loan… which is NOT considered debt?

Answer Options: A. Alimony B. Car payment with only 10 installments left C. Court-ordered child support D. Utility bills

Answer: D. Utility bills

Question: What is the minimum down payment on a VA loan?

Answer Options: A. 3.5% B. 10% C. Depends on service D. None

Answer: D. None; no downpayment is required.

Question: Which is LEAST likely to be a characteristic of a traditional conventional loan?

Answer Options: A. Fixed interest rate B. Fully amortized C. Long-term repayment period D. Variable monthly payments

Answer: D. Variable monthly payments

Question: Laura… appraisal comes in lower… what down payment is required?

Answer Options: A. $86,000 B. $87,000 C. $89,600 D. $94,600

Answer: C. $89,600

Question: If an advertisement states an interest rate, it must also:

Answer Options: A. be available to all borrowers B. calculate total interest C. disclose actual interest rate D. disclose APR

Answer: D. disclose the annual percentage rate

Question: To substantiate income, lender will require how many years of tax returns?

Answer Options: A. two B. three C. four D. five

Answer: A. two

Question: Which best describes the role of an underwriter?

Answer Options: A. evaluates loan applications and makes final decisions B. only uses automated systems C. orders reports D. prepares loan package

Answer: A. Someone who evaluates loan applications and makes final approval decisions

Question: Private mortgage insurance is NOT required when:

Answer Options: A. 20% down B. interest over 5% C. interest below 3.5% D. paid to 85% value

Answer: A. the borrower puts down 20% or more.

Question: A ______ clause makes the entire loan due upon default.

Answer Options: A. acceleration B. alienation C. defeasance D. subordination

Answer: A. acceleration

Question: The reduction of loan balance from payments is called:

Answer Options: A. amortization B. collateralization C. hypothecation D. securitization

Answer: A. amortization