Question: Renee just bought a $300,000 house. Her down payment was $60,000, and she paid two discount points. What is the total cost of the discount points?

Answer Options: A. $2,400 B. $3,000 C. $4,800 D. $6,000

Answer: C. $4,800

Question: When a loan balance for an adjustable-rate mortgage grows because of deferred interest when payments do not cover the interest portion of the loan, this is known as:

Answer Options: A. margin. B. mortgage payment cap. C. negative amortization. D. self-liquidation.

Answer: C. negative amortization

Question: You’re working with a buyer client who wants to buy a house for $400,000. The lender preapproved the buyer for a 30-year fixed-rate loan in the amount of $320,000 at 6.5% interest. According to a factor table for monthly payment per $1,000 of loan, the factor for that loan is 6.32. What is the buyer’s expected monthly payment of principal and interest for this loan?

Answer Options: A. $2,023 B. $2,080 C. $2,528 D. $2,600

Answer: A. $2,023

Question: Sarita made an offer to purchase a home. She could not qualify for the loan she wanted, so the owner agreed to finance the purchase. The parties agreed to a 20-year loan term. Sarita took title to the property, and the seller held a lien against the property. What type of financing instrument was used?

Answer Options: A. Land contract B. Open mortgage C. Option to buy D. Purchase money mortgage

Answer: D. Purchase money mortgage

Question: Which type of debt is NOT considered part of a borrower’s obligations when qualifying for a loan?

Answer Options: A. Streaming TV service payments B. Child support payments C. Furniture installment loan with more than 10 payments remaining D. Retail credit card account payments

Answer: A. Streaming TV service payments

Question: The Real Estate Settlement Procedures Act (RESPA) specifically prohibits which of the following practices in the course of financing?

Answer Options: A. Issuing nonconforming loans B. Kickbacks C. Payment of referral fees from one broker to another broker D. Redlining

Answer: B. Kickbacks

Question: If a borrower sells a property, what type of clause in a mortgage allows the lender to call the outstanding balance due and payable?

Answer Options: A. Acceleration clause B. Alienation clause C. Balloon payment clause D. Exculpatory clause

Answer: B. Alienation clause

Question: A buyer is paying $200,000 for a house. They make a $30,000 down payment, get a first mortgage for $160,000 as well as a second mortgage to cover the balance. What is their combined loan-to-value?

Answer Options: A. 80% B. 85% C. 90% D. 95%

Answer: B. 85%

Question: If a mortgage loan payment is paid PITI, which portion goes into an escrow (impound) account?

Answer Options: A. Interest and taxes B. Taxes and insurance C. Insurance and principal D. Principal and interest

Answer: B. Taxes and insurance

Question: Benji wants to buy a $400,000 house with an 80% conventional loan. Assuming the property appraises for $400,000, what is his required down payment?

Answer Options: A. $32,000 B. $38,000 C. $80,000 D. $100,000

Answer: C. $80,000

Question: Which statement about FHA-insured loans is TRUE?

Answer Options: A. FHA-insured loans are only for low-income borrowers. B. FHA-insured loans require a smaller down payment than conventional loans. C. The FHA provides funds directly to borrowers. D. The FHA sets interest rates for FHA-insured loans.

Answer: B. FHA-insured loans require a smaller down payment than conventional loans.

Question: When a deed of trust contains a power of sale clause, the lender can authorize the trustee to initiate a ______ proceeding when the borrower defaults on the loan.

Answer Options: A. bankruptcy B. judicial foreclosure C. nonjudicial foreclosure D. short sale

Answer: C. nonjudicial foreclosure

Question: A borrower obtains a mortgage loan to purchase a home. In this arrangement, the lender is known as the:

Answer Options: A. beneficiary B. mortgagee C. mortgagor D. trustee

Answer: B. mortgagee