NMLS Practice Test Hard Questions With Complete And Correct Solutions.

A discount point is BEST described as a charge the borrower pays to: A.) A lender to decrease the interest rate on the mortgage loan B.) A mortgage broker at the time of application to obtain a favorable rate C.) The seller as part of the closing costs of a loan D.) A lender to ensure against foreclosure A.) A lender to decrease the interest rate on the mortgage loan A buyer has made an earnest money payment of $5,000. The buyer pays an additional $2,000 in option money to be credited at closing on property with sale price of $160,000. If the required down payment is 20%, how much additional money will the buyer need to provide toward the down payment at closing? A.) $32,000 B.) $27,000 C.) $30,000 D.) $25,000 D.) $25,000 $160,000 x .20 (20%) = 32000 - $7,000 = $25,000 If an applicant works 40 hours every week and is paid $13.52 per hour, what is the applicant's monthly income? A.) $2,163.20 B.) $2,343.47 C.) $2,379.52 D.) $2,487.68 B.) $2,343.47 $13.52x 40 hours = $540.8 x 52 weeks = $28,121.6 annually /12month = $2,343.47 Monthly income The requirement for private mortgage insurance is generally is continued when the loan-to-value ratio falls below: A.) 20% B.) 50% C.) 80% D.) 90% C.) 80% Which of the following documents itemizes all settlement costs including lender charges? A.) Agreement of sale B.) HUD-1/closing Disclosure C.) Form 1003 D.) Forbearance agreement B.) HUD-1/closing Disclosure According to the Truth-in-Lending Act (TILA), the term "refinance" applies to A.) A change in a payment schedule B.) A reduction in annual percentage rate C.) The renewal of a single payment obligation with no change in the original terms D.) The satisfaction of an existing obligation and its replacement by a new obligation D.) The satisfaction of an existing obligation and its replacement by a new obligation What does a loan originator use to determine the estimated value of a property based on an analytical comparison of similar property sales? A.) An appraisal B.) A market survey C.) An area survey D.) A Cost-benefit analysis A.) An appraisal Which of the following methods of disclosure does NOT meet the requirements of Equal Credit Opportunity Act (ECOA)? A.) E-mail B.) Mailed letter C.) Telephone D.) Faxed letter C.) Telephone Term "20 basis points" expressed as a percentage is: A.) 0.2% B.) 0.20% C.) 2.00% D.) 20.00% B.) 0.20% one hundredth of one percent, used chiefly in expressing differences of interest rates. 0.01 so 0.01 x20 = 0.2 According to the Truth-in-Lending Act (TILA), which if the following fees is EXCLUDED from the calculation of the annual percentage rate? A.) Hazard insurance B.) Wire transfer C.) Prepaid interest D.) Mortgage insurance premiums A.) Hazard insurance FHA loans are: A.) Partially guaranteed B.) 100% insured C.) Exempt D.) Entitled A.) Partially guaranteed The late fee for a conventional loan is: A.) 3% of principle and interest B.) 4% of principle and interest C.) 5% of principle and interest D.) 10% of principle and interest C.) 5% of principle and interest A funding fee if required for a: A.) FHA loan B.) VA loan C.) Jumbo loan D.) Conventional loan B.) VA loan A Mortgage Insurance Premium is required on: A.) FHA loan B.) VA loan C.) Jumbo loan D.) Conventional loan A.) FHA loan The mortgagee is the: A.) Borrower B.) Lender C.) Closing agent D.) Mortgage broker B.) Lender The borrower does NOT sign which document: A.) Deed B.) HUD-1/Loan Disclosure C.) Mortgage D.) Note A.) Deed Which documents is usually NOT recorded A.) Assignment of mortgage B.) Note C.) Deed D.) Mortgage B.) Note A mortgage title insurance policy is NOT A.) Based on the loan amount B.) Transferable C.) Optional D.) Required by the lender C.) Optional Which parties sign the deed? A.) Grantor, grantee and two witnesses B.) Grantor and two witnesses C.) Grantee and two witnesses D.) Grantee only B.) Grantor and two witnesses When the mortgagor and the mortgagee title insurance policies are issued at the same time, this is known as: A.) Simultaneous issue B.) Concurrent issue C.) Subsequent issue D.) Dual issue A.) Simultaneous issue A shrubbery hedge is one example of an: A.) Encumbrance B.) Easement C.) Entitlement D.) Acceptable title impediment D.) Acceptable title impediment A loan on personal property only known as: A.) Package mortgage B.) Chattel mortgage C.) Furnishing mortgage D.) Exotic mortgage B.) Chattel mortgage Investopedia Chattel mortgage is a legal term used to describe a loan arrangement in which an item of movable personal property is used as security for the loan. The movable property, or chattel, guarantees the loan in this type of mortgage. This differs from a conventional mortgage in which the loan is secured by a lien on real property. Which of the following is NOT a characteristic of a Tenants in Common form of ownership: A.) Equal shares B.) Buy at different times C.) Right survivorship D.) Ability to will share C.) Right survivorship PITI payments do NOT include which of the following: A.) Principle B.) Funding Fee C.) Hazard Insurance D.) Interest B.) Funding Fee Who does Fannie Mae hold responsible for the quality of an appraisal? A.) Appraiser B.) Borrower C.) Mortgage broker D.) Lender D.) Lender Which law is known as Regulation B? A.) Truth-in-Lending B.) Real Estate Settlement Procedures Act C.) Equal Credit Opportunity Act D.) Patriot Act C.) Equal Credit Opportunity Act Which law prohibits discrimination by lenders? A.) Truth-in-Lending B.) Real Estate Settlement Procedures Act C.) Equal Credit Opportunity Act D.) Patriot Act C.) Equal Credit Opportunity Act A property sold for $200,000 and was appraised at $180,000. The borrower received a loan for $150,000. What is the loan-to-value? A.) 75% B.) 83.3% C.) 90% D.) 92.4$ B.) 83.3% How many days does a lender have to send an adverse action notice? A.) 5 B.) 10 C.) 30 D.) 60 C.) 30 The GFE/Loan Estimate must be mailed or given to the borrower within how many days after rceiving the signed application? A.) 3 business days B.) 7 business days C.) 10 business days D.) 30 business days A.) 3 business days The enforcement of a lien is known as: A.) Closing B.) Foreclosure C.) Warranty inspection D.) Police Action B.) Foreclosure The minimum percentage of ownership in a related service required a conflict of interest disclosure? A.) 5% B.) 10% C.) 25% D.) 50% B.) 10% What minimum percentage o ownership qualifies an individual as self-employed? A.) 5% B.) 10% C.) 25% D.) 50% C.) 25% A salaried employee may have to produce which of the following documents to obtain a loan? A.) 90 day pay stubs B.) 2 years W2's C.) Profit and Loss statement D.) Balance sheet B.) 2 years W2's How may months must be left on an automobile lease to include it as a debt? A.) 2 months B.) 5 months C.) 10 months D.) It is always included D.) It is always included Which law defines the right of rescission? A.) Truth-in-Lending B.) Real Estate Settlement Procedures Act C.) Equal Credit Opportunity Act D.) Patriot Act A.) Truth-in-Lending Investopedia A right of rescission is a right under American federal law set forth by the Truth in Lending Act (TILA) that gives a borrower the right to cancel a home equity loan or line of credit with a new lender, or to cancel a refinance transaction done with another lender other than the current mortgagee within three days of closing. The right is provided on a no-questions-asked basis, and the lender must give up its claim to the property and refund all fees within 20 days of exercising of the right of rescission. How long after the application date must social security payments continue to be received in order to count as income? A.) 3 months B.) 10 months C.) 2 years D.) 3 years D.) 3 years Credit reports on new construction are good for how many days? A.) 90 days B.) 120 days C.) 180 days D.) 225 days B.) 120 days Which clause in a mortgage allows a lender to increase the interest rate? A.) Defeasance B.) Escalation C.) Acceleration D.) Exculpatory B.) Escalation Which clause in a mortgage prevents the lender from foreclosing unless the borrower is in default? A.) Defeasance B.) Escalation C.) Acceleration D.) Exculpatory A.) Defeasance The lender has how many days to send the Satisfaction of Mortgage letter to the borrower once the loan balance is paid? A.) 30 days B.) 60 days C.) 90 days D.) 120 days B.) 60 days Which of the following increases cap rate? A.) Lower purchase price B.) Increase purchase price C.) Decrease cash flow D.) Increase interest rate B.) Increase purchase price Who should applicants contact if they have questions about their credit score or credit information? A.) Credit reporting agency B.) Lender C.) Mortgage broker D.) Attorney A.) Credit reporting agency Who is responsible for maintaining the national flood maps? A.) HUD B.) FEMA C.) FHA D.) VA B.) FEMA A VA appraisal is known as a: A.) CRV B.) Veteran's appraisal report C.) Fannie Mae 1025 D.) AVA A.) CRV Fannie Mae's automated underwriting system is known as: A.) Fannie Mannie B.) Software Helper C.) Desktop Underwriter D.) Loan Prospector C.) Desktop Underwriter There are 10 days left in the month. The purchase price is $150,000, the loan amount is $100,000 and the interest rate is 6%. How much mortgage interest must the borrower pay at closing? A.) $164.38 B.) $250.00 C.) $440.20 D.) $2,739.73 A.) $164.38 100,000 x .06 (6%) = 6000 / 365 days = 16.438 x 10days = $164.38