Question: Which is TRUE regarding the acceptance of a gift to be used as a borrower’s down payment?

Answer Options: A. The amount of the gift cannot be more than 50% of the down payment. B. The gift may come only from a borrower’s parent, sibling, or grandparent. C. There must be a written repayment agreement between the borrower and the donor. D. There should be a gift letter signed by the donor stating that the gift does not need to be repaid.

Answer: D. There should be a gift letter signed by the donor stating that the gift does not need to be repaid.

Question: A borrower has a monthly gross stable income of $4,200 and monthly debts of $280. Using the housing expense ratio of 28% and total debt service ratio of 36% for a conventional loan, what is this borrower’s maximum monthly loan payment (PITI)?

Answer Options: A. $1,670 B. $1,512 C. $1,232 D. $1,176

Answer: D. $1,176

Question: Marcus has a gross monthly income of $7,500. His monthly debts include a proposed PITI of $1,875, a car payment of $400, and a credit card minimum payment of $150. What is the total debt service ratio on this loan?

Answer Options: A. 25% B. 32.3% C. 35% D. 38%

Answer: B. 32.3%

Question: One of the special features of VA financing is that the:

Answer Options: A. borrower is generally not required to make a down payment. B. down payment cannot exceed 3% of the appraised value. C. down payment varies with the property value. D. lender establishes the required down payment.

Answer: A. borrower is generally not required to make a down payment.

Question: When must the Closing Disclosure be provided to the borrower?

Answer Options: A. At the closing table B. At least three business days before closing C. 24 hours before closing D. Seven business days before closing

Answer: B. At least three business days before closing

Question: A property appraises for $20,000 less than the purchase price on a conventional loan. What is the lender’s MOST likely response?

Answer Options: A. Approve the loan based on the purchase price. B. Automatically deny the loan. C. Base the loan amount on the lower appraised value. D. Split the difference between appraisal and purchase price.

Answer: C. Base the loan amount on the lower appraised value.

Question: When the loan-to-value reaches ______ of the property’s original value, the borrower can request that the lender cancel the monthly private mortgage insurance.

Answer Options: A. 72% B. 75% C. 78% D. 80%

Answer: D. 80%

Question: Cameron gets a five-year loan for $22,000 at 8% interest… What kind of loan does Cameron have?

Answer Options: A. Adjustable-rate B. Fully amortized C. Graduated payment D. Straight

Answer: D. Straight

Question: Construction loans are typically paid out in:

Answer Options: A. draws after specific stages of construction have been completed. B. equal installments during the construction process. C. full at the beginning of construction. D. full upon completion of construction.

Answer: A. draws after specific stages of construction have been completed.

Question: The ______ must be received by the borrower at least three business days prior to loan consummation.

Answer Options: A. Appraisal Report B. Closing Disclosure C. Loan Estimate D. Title Report

Answer: B. Closing Disclosure

Question: A loan is set up so that the borrower’s monthly payments are the same size… Which type of loan is this?

Answer Options: A. Fully amortized B. Partially amortized C. Reverse annuity D. Straight note

Answer: A. Fully amortized

Question: A prospective borrower… two-party instrument that allows the lender to place a lien… This is an example of a:

Answer Options: A. deed of trust B. land contract C. mortgage D. promissory note

Answer: C. mortgage

Question: When James bought his house… two discount points… What did the discount points cost James?

Answer Options: A. $3,500 B. $4,250 C. $5,500 D. $7,000

Answer: C. $5,500