Questions and Answers
A discount point is BEST described as a charge the borrower pays to:
If the required down payment is 20%, how much additional money will the buyer need to provide toward the down payment at closing?
If an applicant works 40 hours every week and is paid $13.52 per hour, what is the applicant's monthly income?
The requirement for private mortgage insurance is generally continued when the loan-to-value ratio falls below:
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Which of the following documents itemizes all settlement costs including lender charges?
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According to the Truth-in-Lending Act (TILA), the term 'refinance' applies to:
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What does a loan originator use to determine the estimated value of a property based on an analytical comparison of similar property sales?
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Which of the following methods of disclosure does NOT meet the requirements of Equal Credit Opportunity Act (ECOA)?
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Term '20 basis points' expressed as a percentage is:
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According to the Truth-in-Lending Act (TILA), which of the following fees is EXCLUDED from the calculation of the annual percentage rate?
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FHA loans are:
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The late fee for a conventional loan is:
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A funding fee is required for a:
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A Mortgage Insurance Premium is required on:
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The mortgagee is the:
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The borrower does NOT sign which document?
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Which document is usually NOT recorded?
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A mortgage title insurance policy is NOT
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Which parties sign the deed?
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When the mortgagor and the mortgagee title insurance policies are issued at the same time, this is known as:
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Study Notes
Mortgage Concepts
- Discount Point: A fee paid to a lender to lower the mortgage interest rate.
- Earnest Money and Down Payment: For a property valued at $160,000 with a 20% down payment, after initial payments, the additional required down payment is $25,000.
- Monthly Income Calculation: A worker earning $13.52 per hour, working 40 hours weekly, has a monthly income of $2,343.47.
Mortgage Insurance and Fees
- Private Mortgage Insurance (PMI): Required when the loan-to-value ratio is above 80%.
- Documents for Settlement Costs: The HUD-1/Closing Disclosure outlines all settlement costs, including lender charges.
- Truth-in-Lending Act (TILA): Defines refinancing as replacing an old obligation with a new one.
Property Valuation and Disclosure
- Appraisal: A loan originator uses an appraisal to estimate property value based on similar property sales.
- Equal Credit Opportunity Act (ECOA): Disclosure requirements exclude methods like telephone communication.
Interest Rates and Fees
- Basis Points: "20 basis points" is equivalent to 0.20%.
- APRs Exclusions: Hazard insurance is excluded from the calculation of annual percentage rate.
- FHA Loans: These loans are partially guaranteed by the government.
Loan Conditions and Requirements
- Late Fees: A conventional loan incurs a late fee of 5% on principal and interest.
- Funding Fee Requirement: Required for VA loans; FHA loans do not incur this fee.
- Mortgage Insurance Premium: Essential for FHA loans.
Loan and Mortgage Documentation
- Mortgagee: This term refers to the lender involved in the mortgage agreement.
- Document Signing: Borrowers do not sign the deed, but they do sign the HUD-1/Loan Disclosure, mortgage, and note.
- Recordable Documents: The note is typically not recorded, whereas the assignment of mortgage, deed, and mortgage are.
Title Insurance and Deed Signing
- Mortgage Title Insurance Policy: It is based on the loan amount but is not optional; rather, it is typically required by the lender.
- Deed Signing Requirements: The grantor and two witnesses must sign the deed.
Title Insurance Policies
- Simultaneous Issuance: Occurs when the mortgagor and mortgagee title insurance policies are issued together.
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Description
Prepare for the NMLS exam with this set of challenging flashcards. Each card presents a scenario or question to test your understanding of key mortgage concepts and practices. Boost your knowledge and confidence before taking the test.
