NMLS MLO EXAM – MORTGAGE LOAN ORIGINATOR LICENSING PREPARATION – COMPREHENSIVE
PRACTICE QUESTIONS AND CORRECT ANSWERS A+ ALREADY GRADED LATEST VERSION
1. What are two of The Promissory Note and the Deed of Trust or mortgage (correct)
the most impor- -A note or promissory note is a written, legally binding promise to repay a debt. The
tant documents note creates the debt, and the mortgage secures the payment. When the property
that the borrow- is foreclosed on, the lender is foreclosing on the note. The mortgage or deed of
er signs at settle- trust is the security instrument that the borrower gives to the lender that protects
ment? the lender's interest in the property. When the borrower signs the mortgage or
deed of trust, they are giving the lender the right to take the property by foreclosure
if they fail to pay their mortgage properly.
The Loan Note and First Payment Letter
The Mortgage and Right of Rescission
Error and Omissions and the Loan Note
2. If there are two Title sharers
borrowers on the
loan but the Co-mortgagors (correct)
two borrowers - Only borrowers who are married can be included on the same 1003 and be
are unmarried, considered co-borrowers. If there are two unmarried borrowers, they must fill out
they would be two separate 1003s. These two borrowers are called co-mortgagors
considered what: Co-borrowers
Community property holders
3. A borrower pur- $9,550 (Correct)
chases a home - First find out what the entire down payment is, 10% of $120,500 is $12,050.
for $120,500 and Subtract the earnest money from the total down payment, $12,050 - $2,500 =
is putting 10% $9,550.
down. If he
has already paid $8,550
$2,500 in earnest
, NMLS MLO EXAM – MORTGAGE LOAN ORIGINATOR LICENSING PREPARATION – COMPREHENSIVE
PRACTICE QUESTIONS AND CORRECT ANSWERS A+ ALREADY GRADED LATEST VERSION
money, what is $8,345
the rest of the
down payment at $10,500
closing?
4. When you or- When you order an Insurance binder on a borrower's loan file, the one-page sheet
der an Insur- that summarizes all the insurance information is known as the:
ance binder on
a borrower's loan binder reference page.
file, the one-page
sheet that sum- 1008.
marizes all the in-
surance informa- binder summary page.
tion is known as
the: Declaration page. (correct)
- Borrowers often need home insurance binders to provide proof of insurance cov-
erage when purchasing a house with a mortgage. The insurance binder specifies
all the protections for which the borrower is covered while they wait for a new
policy, as well as any coverage limits, deductibles, fees, terms and conditions, this
is all included on the declaration page. The declaration page is the front page (or
pages) of the policy that specifics all the pertinent details of the policy.
5. How is rental in- Only when the borrower has a two year history of managing rental properties
come calculated
when the borrow- Only when the borrower has a two year history of managing rental properties and
er owns rental the borrower has rent loss insurance
properties other
than the subject 75% of the income less the PITI. If the net is positive, include as income; if the net
property? is negative, include as a monthly debt (correct)
- Generally rental income is calculated, 75 percent of the rental income, 25 percent
vacancy factor, or an average of the Schedule E (this is a schedule of the borrower's
tax return) income with depreciation added back. You would have to subtract
PRACTICE QUESTIONS AND CORRECT ANSWERS A+ ALREADY GRADED LATEST VERSION
1. What are two of The Promissory Note and the Deed of Trust or mortgage (correct)
the most impor- -A note or promissory note is a written, legally binding promise to repay a debt. The
tant documents note creates the debt, and the mortgage secures the payment. When the property
that the borrow- is foreclosed on, the lender is foreclosing on the note. The mortgage or deed of
er signs at settle- trust is the security instrument that the borrower gives to the lender that protects
ment? the lender's interest in the property. When the borrower signs the mortgage or
deed of trust, they are giving the lender the right to take the property by foreclosure
if they fail to pay their mortgage properly.
The Loan Note and First Payment Letter
The Mortgage and Right of Rescission
Error and Omissions and the Loan Note
2. If there are two Title sharers
borrowers on the
loan but the Co-mortgagors (correct)
two borrowers - Only borrowers who are married can be included on the same 1003 and be
are unmarried, considered co-borrowers. If there are two unmarried borrowers, they must fill out
they would be two separate 1003s. These two borrowers are called co-mortgagors
considered what: Co-borrowers
Community property holders
3. A borrower pur- $9,550 (Correct)
chases a home - First find out what the entire down payment is, 10% of $120,500 is $12,050.
for $120,500 and Subtract the earnest money from the total down payment, $12,050 - $2,500 =
is putting 10% $9,550.
down. If he
has already paid $8,550
$2,500 in earnest
, NMLS MLO EXAM – MORTGAGE LOAN ORIGINATOR LICENSING PREPARATION – COMPREHENSIVE
PRACTICE QUESTIONS AND CORRECT ANSWERS A+ ALREADY GRADED LATEST VERSION
money, what is $8,345
the rest of the
down payment at $10,500
closing?
4. When you or- When you order an Insurance binder on a borrower's loan file, the one-page sheet
der an Insur- that summarizes all the insurance information is known as the:
ance binder on
a borrower's loan binder reference page.
file, the one-page
sheet that sum- 1008.
marizes all the in-
surance informa- binder summary page.
tion is known as
the: Declaration page. (correct)
- Borrowers often need home insurance binders to provide proof of insurance cov-
erage when purchasing a house with a mortgage. The insurance binder specifies
all the protections for which the borrower is covered while they wait for a new
policy, as well as any coverage limits, deductibles, fees, terms and conditions, this
is all included on the declaration page. The declaration page is the front page (or
pages) of the policy that specifics all the pertinent details of the policy.
5. How is rental in- Only when the borrower has a two year history of managing rental properties
come calculated
when the borrow- Only when the borrower has a two year history of managing rental properties and
er owns rental the borrower has rent loss insurance
properties other
than the subject 75% of the income less the PITI. If the net is positive, include as income; if the net
property? is negative, include as a monthly debt (correct)
- Generally rental income is calculated, 75 percent of the rental income, 25 percent
vacancy factor, or an average of the Schedule E (this is a schedule of the borrower's
tax return) income with depreciation added back. You would have to subtract
