Guidelines For Taking A Detailed Loan Application OLD QUIZ

Question 1 of 50

1. Question

If borrowers accept an interest rate that is lower than the market, they must pay:

A. A Buydown Fee
B. A Rate Reduction Fee
C. Discount Points
D. None of the Above

Question 2 of 50

2. Question

If borrowers accept an interest rate that is higher than the market rate, the lender may collect an extra profit on the loan, referred to as:

A. Yield Spread Premium
B. Premium Profit
C. Profit Margin
D. Buydown subsidy

Question 3 of 50

3. Question

The loan application process involves verifying employment and residence for the last:

A. One Year
B. Two Years
C. Three Years
D. Four Years

Question 4 of 50

4. Question

The seller, builder, or Realtor may pay the borrower’s closing costs, discount points, buydown subsidy, and first year PMI premium (if charged) subject to LTV limitations. If the LTV is less 75% or less , the maximum contribution is:

A. 2% of the lesser of sales price or appraised value
B. 3% of the lesser of sales price or appraised value
C. 6% of the lesser of sales price or appraised value
D. 9% of the lesser of sales price or appraised value

Question 5 of 50

5. Question

If the LTV is between 76% – 90%, the seller, builder, or Realtor maximum contribution is:

A. 2% of the lesser of sales price or appraised value
B. 3% of the lesser of sales price or appraised value
C. 6% of the lesser of sales price or appraised value
D. 9% of the lesser of sales price or appraised value

Question 6 of 50

6. Question

If the LTV is over 90%, the seller, builder, or Realtor maximum contribution is:

A. 2% of the lesser of sales price or appraised value
B. 3% of the lesser of sales price or appraised value
C. 6% of the lesser of sales price or appraised value
D. 9% of the lesser of sales price or appraised value

Question 7 of 50

7. Question

A copy of the canceled check for the Earnest Money Deposit is required if the amount of the check equals:

A. 1% or more of the sales price
B. 2% or more of the sales price
C. 3% or more of the sales price
D. 5% or more of the sales price

Question 8 of 50

8. Question

If the sales contract indicates that the seller is including any personal property items, such as a washer and dryer, or riding lawn mower:

A. The contract should state that these items are included in the sales price.
B. These items should be identified as personal property items and set out in a separate Bill of Sale.
C. The Realtor should negotiate a deal for these items on the side.
D. None of the Above

Question 9 of 50

9. Question

If the borrower’s spouse signs the sales contract and takes joint title to the property, but will not be obligated on the loan (as in the case of a spouse who is not employed and will not be contributing income for qualifying), the spouse must still sign what legal document?

A. None of the documents
B. Note
C. Warranty Deed
D. Mortgage Security Deed / Deed to Secure Debt

Question 10 of 50

10. Question

If any changes are made to the sales contract, the changes must be initialed by:

A. Buyers
B. Sellers
C. Both the Buyer & Seller
D. A new contract is required. Initialed changes on Real Estate contracts are not permitted.

Question 11 of 50

11. Question

If the borrower’s name on the sales contract is “Billy Bob Jones” but the name on the loan application is “William R. Jones”:

A. Ask for a copy of their driver’s license.
B. The credit bureau must do a credit check for both names.
C. Only a credit check under “Billy Bob Jones” must be made
D. Only a credit check under “William R. Jones” must be made.

Question 12 of 50

12. Question

“PITI” stands for:

A. Payment including taxes and insurance
B. Payment, interest, taxes, and insurance
C. Principal, interest, taxes, and insurance
D. None of the Above

Question 13 of 50

13. Question

Monthly principal and interest is calculated based on the:

A. Loan amount, interest rate, and term of loan
B. Sales price, payment period, and rate of return
C. Sales price, interest rate and term of loan
D. Estimated rate of return divided by the payment period

Question 14 of 50

14. Question

The P & I Factor for a rate of 7.0% with a maturity of 360 months is 6.653025.
This factor represents:

A. Dollars per thousand of the sales price
B. Dollar per hundred of the sales price
C. $ 6.65 for every thousand of the loan amount
D. 6.65% of the loan amount

Question 15 of 50

15. Question

If the loan amount is $100,000, and the rate is 7.0% with a maturity of 360 months, the monthly P & I would be?

A. $700.00 per month
B. $583.33 per month
C. $883.21 per month
D. $665.30 per month

Question 16 of 50

16. Question

The only property insurance coverage required by the lender is known as:

A. Property Insurance
B. Hazard Insurance
C. Title Insurance
D. None of the Above

Question 17 of 50

17. Question

The minimum property insurance coverage permitted by the lender must cover at least the:

A. Loan amount
B. Sales Price + Cost of Hazard Insurance
C. The sales price
D. None of the Above

Question 18 of 50

18. Question

Most borrowers will obtain an insurance policy that covers both the property and the contents. This type of insurance coverage is called:

A. Fire Insurance
B. Hazard Insurance
C. Homeowners Insurance
D. Mortgage Insurance

Question 19 of 50

19. Question

Private mortgage insurance is required on all loans with a loan-to-value greater than:

A. 95%
B. 90%
C. 80%
D. 75%

Question 20 of 50

20. Question

Many lenders today offer the borrowers the option of accepting a higher interest rate and paying for the private mortgage insurance out of the extra money collected each month. This is called:

A. Lender-funded mortgage insurance
B. Interest rate adjustment insurance
C. PMI coverage
D. None of the above

Question 21 of 50

21. Question

The advantage to the borrowers of accepting a higher rate and having the lender pay for private mortgage insurance is:

A. Interest is tax deductible, while PMI is not.
B. PMI is tax deductible, while interest is not.
C. There is no benefit to the borrower or the lender.
D. PMI is deductible in certain circumstances. Never give financial advise unless you are properly licensed to do so.

Question 22 of 50

22. Question

The primary role of private mortgage insurance is:

A. To pay off the loan upon the death of the borrower.
B. To insure the borrower’s contents.
C. To pay the insurance provider if the borrower defaults on the loan.
D. To protect the lender in the event the borrowers default on the loan.

Question 23 of 50

23. Question

Property taxes are assessed based on the:

A. Sales price, or value, of the property.
B. Loan amount
C. Equity in the property
D. None of the Above

Question 24 of 50

24. Question

The maximum Front Ratio used as a guide for qualifying a borrower is:

A. 25% of gross monthly income
B. 28% of gross monthly income
C. 36% of gross monthly income
D. 50% of gross monthly income

Question 25 of 50

25. Question

The maximum Back Ratio used as a guide for qualifying a borrower is:

A. 32% of gross monthly income
B. 35% of gross monthly income
C. 36% of gross monthly income
D. 50% of gross monthly income

Question 26 of 50

26. Question

These Front and Back Ratios are used as a guide only, and may be exceeded if:

A. The borrowers have good credit.
B. There are strong compensating factors to offset higher ratios.
C. The borrowers have been on their current jobs for two years.
D. Ratios may never be exceeded.

Question 27 of 50

27. Question

The temporary interest buydown may not increase more than:

A. ½% within a six month period
B. 1% within a twelve month period
C. 2% within a twelve month period
D. 3% within a twelve month period

Question 28 of 50

28. Question

Under RESPA, the lender is required to provide a Loan Estimate to the borrowers within:

A. 3 days of receiving the loan application.
B. 3 business days of receiving a completed loan application.
C. 3 days after closing.
D. 3 days prior to closing.

Question 29 of 50

29. Question

A lender’s inspection fee is typically required:

A. Before the current owners move out of the property.
B. At the time the property appraisal is performed.
C. If the appraisal indicates repair items that must be satisfied prior to closing.
D. It is always required.

Question 30 of 50

30. Question

The purpose of a Real Estate Tax Service fee is:

A. To set up the borrower’s escrow account.
B. To collect annual escrow funds
C. To collect the borrower’s homeowner’s insurance.
D. To set up the lender to obtain annual property tax information.

Question 31 of 50

31. Question

The purpose of a Flood Certification is to:

A. Determine if the property is in a Special Flood Hazard Area
B. Advise potential homebuyers that the property is in a FEMA zone.
C. Screen all properties for the Army Corps of Engineers zoning system.
D. None of the Above

Question 32 of 50

32. Question

Another term for yield spread premium is:

A. Discount Points
B. Commitment Fee
C. Overage
D. Premium Pricing

Question 33 of 50

33. Question

The originating lender that sells a loan in the secondary market may choose to give up the right to service the loan in exchange for a fee paid by the lender purchasing the loan. This fee is called:

A. Origination Fee
B. Discount Points
C. Servicing Fee
D. Service Release Premium

Question 34 of 50

34. Question

A search of public records to determine any outstanding liens or judgments currently recorded with the property is called:

A. Public Records Search
B. Title Examination
C. Survey
D. Closing Review

Question 35 of 50

35. Question

The purpose of title insurance is:

A. To protect the property in the event of fire or damage.
B. To pay off the loan if the borrower dies.
C. To protect against any overlooked liens against the property that were missed, fraudulent activities, or disputed claims from estates.
D. All of the Above

Question 36 of 50

36. Question

Monthly interest on a mortgage is not due and payable until it has:

A. Accrued
B. Amortized
C. Amended
D. Accelerated

Question 37 of 50

37. Question

The interest collected at closing to cover the amount owed from the date of closing to the end of the month is called:

A. Interest Shortfall
B. Interest Rate prorated
C. Prepaid Interest
D. Interest Accrual

Question 38 of 50

38. Question

The special information booklet entitled Settlement Costs – A HUD Guide
must be provided to the borrowers:

A. Within 24 hours of the date of loan application
B. Within 1 day of the date of the loan application
C. Within 3 days of the date of loan application
D. Within 3 business days of the date of loan application

Question 39 of 50

39. Question

This special information booklet is not required on the following transactions:

A. Purchase Transactions
B. Refinance, Second Mortgage or Home Equity
C. This Booklet is Required for All Transactions
D. None of the Above

Question 40 of 50

40. Question

The Loan Estimate must be provided:

A. Within 24 hours of the date of loan application
B. Within 1 day of the date of the loan application
C. Within 3 days of the date of loan application
D. Within 3 business business days of the date of the application

Question 41 of 50

41. Question

Truth-in-Lending in Advertising requires that, when quoting an interest rate to the borrower:

A. The APR must be quoted at the same time the rate is quoted.
B. Lenders are not permitted to quote rates to borrowers without a signed loan application.
C. Lenders are not permitted to quote rates to borrowers without obtaining a copy of their driver’s license
D. The lender should always quote a higher rate just to be on the safe side.

Question 42 of 50

42. Question

In preparing the Loan Estimate and calculating the APR,
those fees that affect the APR are called:

A. Financing Fees
B. Finance Charges
C. Financing Concessions
D. None of the Above

Question 43 of 50

43. Question

Borrowers applying for a loan on an investment property must have cash reserves equal to:

A. Three payments (PITI) for the subject mortgage
B. Six payments (PITI) for the subject mortgage
C. Nine payments (PITI) for the subject mortgage
D. Twelve payments (PITI) for the subject mortgage

Question 44 of 50

44. Question

In determining the manner in which title will be held, if the borrower and co-borrower are married, typically title will be held as:

A. Joint Tenancy with Right of Survivorship
B. Tenancy in Common
C. Husband and Wife
D. Tenancy with No Survivorship

Question 45 of 50

45. Question

Gift from a relative is permitted to satisfy part of the cash required to close.
If the LTV is between 90%-95%, gift funds are acceptable as long as the borrower contributes:

A. 3% of his or her own funds into the transaction.
B. 5% of his or her own funds into the transaction.
C. 20% of his or her own funds into the transaction.
D. Gift funds are not permitted on a 95% LTV.

Question 46 of 50

46. Question

If the LTV is 80% or less, gift funds are permitted and may include:

A. 100% of the full amount required to close.
B. 75% of the full amount required to close.
C. 50% of the full amount required to close.
D. 25% of the full amount required to close.

Question 47 of 50

47. Question

If the relative providing the gift has lived with the borrower and will continue to do so, a gift is permitted to be pooled with the borrower’s funds to satisfy the minimum cash down payment requirement if the relative has lived with the borrower for the last:

A. Six months
B. Twelve months
C. Eighteen months
D. Twenty four months

Question 48 of 50

48. Question

The property seller may take a borrower’s existing property in trade as part of the down payment:

A. As long as the borrower has made a 1% cash down payment and his for her equity contribution is a true-value consideration.
B. As long as the borrower has made a 3% cash down payment and his or her equity contribution is a true-value consideration.
C. As long as the borrower has made a 5% cash down payment and his or her equity contribution is a true-value consideration.
D. Trade equity is not permitted.

Question 49 of 50

49. Question

Borrowed funds may be used for funds to close as long as the funds are:

A. Drawn from an unsecured line of credit.
B. Mattress money.
C. Fully secured or collateralized by an asset.
D. Covered by overdraft protection on a checking account.

Question 50 of 50

50. Question

Underwriting guidelines require that you verify the borrower’s employment for the past:

A. Twenty four hours before closing
B. Twelve months
C. Twenty four months
D. Thirty six months

Guidelines For Taking A Detailed Loan Application OLD QUIZ