1) Prepayment Penalty is:
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a) Penalty for being late on my mortgage payment
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b) A clause on your mortgage that states if you pay off a large portion of your mortgage, the lender may charge you a penalty within the first few years of the mortgage (1-5 years typically)
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c) A penalty for making your payments early every month
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d) All of the above
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2) When is an Adjustable Rate Mortgage (ARM) more advantageous to hold?
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a) If you acquire a Reverse Mortgage
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b) When the market interest rates are dropping
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c) When the market interest rates are high
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d) All of the above
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3) Contract has all items except:
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a) Address and closing date of the property being purchased |
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b) Signatures of the Seller and Buyer |
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c) Signature of the Realtor |
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d) Price and down payment of the property |
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4) Home Inspector is going to:
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a) Point out deficiencies in a property |
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b) Give you a written report of potential problems |
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c) Request you be on site during the inspection |
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d) All of the above |
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| 5) When I sign a purchase contract on a home, the deposit goes to: |
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a) The seller upon contract signing |
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b) The bank holding the sellers mortgage |
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c) Any third party willing to hold the money |
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d) The Realtor, Lawyer, Title or Escrow agent |
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6) Interest Rate is determined by all these factors except:
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a) Your income and debt ratio |
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b) Where the property is located |
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c) Your credit score and balances |
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d) If you were late on your rent or mortgage |
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| 7) As far as lending is concerned, when is a Foreclosure considered a Foreclosure? |
a) When the bank sells the property
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b) When you miss your first mortgage payment
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c) When the bank’s lawyers fill in the paperwork starting the process |
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d) Only if you decide not to make anymore payments |
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| 8) What is Reserves funding used for? |
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a) Escrows for Taxes and Insurances |
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b) Where a mortgage payment sits until the bank actually deposits it |
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c) A special fund for the military |
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d) None of the above |
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| 9) A Good Faith Estimate: |
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a) Is required to be given within 3 days of application |
b) Lists your costs required to close a loan
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c) Gives an estimate of funds you will need at a purchase closing
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d) All of the above |
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10) Truth in Lending does everything except:
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a) Shows the exact interest rate you will receive
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b) Shows if you may have a Prepayment Penalty
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c) What your Principal and Interest payments are estimated to be
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d) Will show if your mortgage has a balloon payment at the end |
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11) Regarding Refinance costs, they:
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a) Are extremely low because I’ve already closed once. |
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b) I don’t have to pay for title insurance because you can transfer your original to the new bank |
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c) Are between 3-6% of the mortgage balance |
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d) Your original bank pays them for you. |
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| 12) When do you need Mortgage Insurance? |
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a) Anytime you have a mortgage |
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b) Only if you have low balances in your bank |
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c) If you have more than 20% down on a purchase |
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d) When the Mortgage is greater than 80% of the Appraisal |
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| 13) Credit scores can increase if I do everything except: |
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a) Make all payments on time |
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b) Use my credit cards to the maximum limit |
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c) Reduce the balances on each account |
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d) Close dormant accounts |
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| 14) Credit scores can decrease if I do everything except: |
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a) Use my credit cards to the maximum limit |
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b) Missing only one payment |
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c) Send in all the applications for credit cards |
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d) Reduce the balances on each account |
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| 15) Which type of Credit is the worst to have? |
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a) Mortgages |
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b) Installment Loans |
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c) Credit Cards |
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d) Finance or Store credit cards |
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| 16) Negative Amortization means: |
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a) My property is located in a negative location |
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b) Is a list of payments showing how the mortgage is paid off |
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c) A minimum payment where interest charges for the month are added to the balance of the Mortgage |
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d) None of the above |
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| 17) What is PITI? |
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a) Principal, Interest, Taxes, Insurance |
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b) What a typical mortgage payment includes |
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c) A figure used in Debt Ratio calculations |
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d) All of the above |
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| 18) Debt Ratio includes all following numbers except: |
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a) Monthly Mortgage Payments |
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b) Monthly Income |
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c) Monthly installment and credit card payments |
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d) Monthly heating or A/C bills |
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| 19) These following documents are needed to qualify for a loan except: |
a) Birth certificate
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b) Legal Picture Identification
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c) Proof of Employment
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d) W-2 or Tax returns for the prior 2 years |
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| 20) Payments are considered late on your credit when: |
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a) You’re 5 days late |
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b) You’re 15 days late |
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c) You pay at the last day of the month |
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d) You’re over 30 days late |
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| 21) What does NOT qualify as proof of assets for a mortgage? |
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a) Automobile |
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b) Savings account |
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c) Checking account |
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d) Retirement account |
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| 22) Which statement LEAST describes Predatory Lending? |
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a) The application is different than what you told the lender |
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b) Tells you your payment must meet guidelines |
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c) Has you sign blank forms |
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d) Changes terms at closing without explanatio |
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| 23) If I make $500 a week before taxes, how much do I make a month? |
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a) $1,000 |
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b) $2,000 |
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c) $2,167 |
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d) $6,000 |
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| 24) Who gets to pick the appraiser? |
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a) The buyer |
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b) The seller |
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c) The lender |
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d) Any of the above |
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| 25) An Appraiser determines property value by: |
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a) What your neighbor sold his house for |
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b) What you paid for your property originally |
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c) What the seller is willing to sell it for |
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d) What a comparable property in your area have sold recently |
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| 26) Which is the best Insurance policy if the replacement value is $120,000 & the property is worth $150,000: |
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a) $100,000 policy on a $100,000 mortgage |
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b) $120,000 policy on a $130,000 mortgage |
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c) $130,000 policy on a $120,000 mortgage |
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d) $150,000 policy on a $120,000 mortgage |
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| 27) Title Insurance |
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a) Is paid only at a purchase closing |
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b) Is paid at any mortgage closing |
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c) Can be transferred |
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d) Is not required for a Refinance |
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| 28) On a refinance, what fees are NOT required to be paid? |
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a) Title Insurance |
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b) Government Fees |
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c) Bank/Lender fees |
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d) Realtor fees |
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| 29) What is a HUD-1 show? |
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a) How much the property is worth |
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b) What fees that should be charged at closing |
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c) A closing document showing all fees |
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d) An application proving citizenship |
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| 30) Which of the following LEAST describes a Realtors function? |
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a) Pre-qualify me for a mortgage |
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b) Be honest and ethical with all parties |
c) Write a contract and explain steps
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d) Listen carefully to the clients needs |
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