The Cost of Funds Index is traditionally used to determine interest rates on what type of loans?
B. rate adjustments on adjustable rate programs
A loan adjustment based on LIBOR is affected by the:
C. London Interbank Offered Rate
A/An_______is a loan with an interest rate that can adjust monthly and that offers a borrower a number of payment choices such as: 30 year fixed P&I/Interest-Only/1% of the loan resulting in negative amortization.
B. option ARM
What does the acronym APR stand for?
B. annual percentage rate
Which of the following is the best defined as a loan that exceeds Fannie Mae and Freddie Mac's maximum loan limits?
B. a non-conforming loan
Which of the following terms is defined as the method in which a lien is removed from property following full payment of a loan on the property?
C. reconveyance
A MIP is mandatory when a loan is:
B. an FHA loan
A mortgage insurance premium is mandatory:
A. for 5 years
Which of the following loan programs does not require credit or income documentation and does not require repayment?
B. reverse mortgage
If a lender agrees to subordinate a loan, what has occurred?
B. the borrower has obtained a second lien
A borrower is a 65 year old retiree with significant equity in his home. Which of the following would be the best option to assist him with paying for repairs on his home?
C. HECM
Which of the following loan types is best described as a loan with a payment schedule made up of a series of small periodic payments and a larger lump sum due upon maturity?
C. a loan with a balloon payment provision
Which of the following would address the principal and interest payments due on a loan?
D. the amortization schedule
What is Fannie Mae's purpose in the secondary market?
D. to provide a source of funds for lenders
Which of the following loans are assumable?
D. VA loans
The Federal Housing Administration:
D. insures loans
USDA loans are primarily for properties located in:
A. rural areas
A/An_______is a loan with an interest rate that can adjust monthly and that offers a borrower a number of payment choices such as: 30 year fixed P&I/Interest-Only/1% of the loan resulting in negative amortization.
B. option ARM
Mortgage backed securities (MBSs) are a product of which of the following?
B. the secondary market
Increasing loan balances resulting from the application of periodic payments creates which of the following for borrowers:
B. negative amortization
VA loans require which of the following?
D. funding fee
Fannie Mae and Freddie Mac securitize what type of mortgage loans?
B. conventional loans
Which of the following terms specifically refers to a loan that is NOT obtained through a program of the federal government?
B. conventional loan
Which of the following is an example of open-ended credit?
A. HELOC
Which of the following is another term for a junior lien?
A. subordinate lien
Which of the following is the best defined as a loan that exceeds Fannie Mae and Freddie Mac's maximum loan limits?
B. a non-conforming loan
According to the Guidance on Nontraditional Mortgage Product Risks, which of the following risks would be important to communicate to loan applicants with regard to nontraditional ARMs?
C. the possibility of payment shock when amortizing payments begin
Nontraditional ARMs are considered the riskiest of loans when they include any of the following except:
B. a refinance provision
A bi-weekly mortgage is a strategy some borrowers use to achieve interest savings. However, there can be drawbacks. Which of the following is not considered a drawback to a bi-weekly mortgage?
B. the borrower ends up making an extra mortgage payment per year
What is used to determine the interest rate change on an ARM?
D. index and margin
Margin is defined as:
A. the amount above the index that an interest rate can adjust for an ARM
Which of the following loans might be used to finance a property in a high cost geographic region of the country?
D. jumbo loan
What factors do lenders analyze in order to determine if a borrower will be financially able to meet the demands of loan repayment?