General Mortgage Knowledge Practice

  1. The acronym PFC stands for:




    B. prepaid finance charge
  2. Why are FHA loans beneficial to lenders?




    D. they are insured by the federal government
  3. The Cost of Funds Index is traditionally used to determine interest rates on what type of loans?




    C. rate adjustments on adjustable rate programs
  4. A loan adjustment based on LIBOR is affected by the:




    C. London Interbank Offered Rate
  5. 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.




    D. option ARM
  6. What does the acronym APR stand for?




    C. annual percentage rate
  7. Which of the following is the best defined as a loan that exceeds Fannie Mae and Freddie Mac's maximum loan limits?




    A. a non-conforming loan
  8. 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
  9. A MIP is mandatory when a loan is:




    B. an FHA loan
  10. A mortgage insurance premium is mandatory:




    C. for 5 years
  11. Which of the following loan programs does not require credit or income documentation and does not require repayment?




    D. reverse mortgage
  12. If a lender agrees to subordinate a loan, what has occurred?




    C. the borrower has obtained a second lien
  13. 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
  14. 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
  15. Which of the following would address the principal and interest payments due on a loan?




    A. the amortization schedule
  16. What is Fannie Mae's purpose in the secondary market?




    D. to provide a source of funds for lenders
  17. Which of the following loans are assumable?




    B. VA loans
  18. The Federal Housing Administration:




    C. insures loans
  19. USDA loans are primarily for properties located in:




    B. rural areas
  20. 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.




    C. option ARM
  21. Mortgage backed securities (MBSs) are a product of which of the following?




    A. the secondary market
  22. Increasing loan balances resulting from the application of periodic payments creates which of the following for borrowers:




    A. negative amortization
  23. VA loans require which of the following?




    A. funding fee
  24. Fannie Mae and Freddie Mac securitize what type of mortgage loans?




    D. conventional loans
  25. Which of the following terms specifically refers to a loan that is NOT obtained through a program of the federal government?




    B. conventional loan
  26. Which of the following is an example of open-ended credit?




    C. HELOC
  27. Which of the following is another term for a junior lien?




    A. subordinate lien
  28. Which of the following is the best defined as a loan that exceeds Fannie Mae and Freddie Mac's maximum loan limits?




    A. a non-conforming loan
  29. 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?




    A. the possibility of payment shock when amortizing payments begin
  30. Nontraditional ARMs are considered the riskiest of loans when they include any of the following except:




    C. a refinance provision
  31. 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?




    A. the borrower ends up making an extra mortgage payment per year
  32. What is used to determine the interest rate change on an ARM?




    D. index and margin
  33. Margin is defined as:




    A. the amount above the index that an interest rate can adjust for an ARM
  34. Which of the following loans might be used to finance a property in a high cost geographic region of the country?




    C. jumbo loan
  35. What factors do lenders analyze in order to determine if a borrower will be financially able to meet the demands of loan repayment?




    B. size of the borrower's existing debt burden
Author
Holly
ID
372
Card Set
General Mortgage Knowledge Practice
Description
General Mortgage Knowledge Practice Questions
Updated