NMLS PRACTICE TEST HARD QUESTIONS | LATEST UPDATE| ULTIMATE SOLUTION

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 - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER 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% - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER C.) Telephone Term "20 basis points" expressed as a percentage is: A.) 0.2% B.) 0.20% C.) 2.00% D.) 20.00% - CORRECT ANSWER 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 - CORRECT ANSWER A.) Hazard insurance FHA loans are: A.) Partially guaranteed B.) 100% insured C.) Exempt D.) Entitled - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER B.) VA loan A Mortgage Insurance Premium is required on: A.) FHA loan B.) VA loan C.) Jumbo loan D.) Conventional loan - CORRECT ANSWER A.) FHA loan The mortgagee is the: A.) Borrower B.) Lender C.) Closing agent D.) Mortgage broker - CORRECT ANSWER B.) Lender The borrower does NOT sign which document: A.) Deed B.) HUD-1/Loan Disclosure C.) Mortgage D.) Note - CORRECT ANSWER A.) Deed Which documents is usually NOT recorded A.) Assignment of mortgage B.) Note C.) Deed D.) Mortgage - CORRECT ANSWER B.) Note A mortgage title insurance policy is NOT A.) Based on the loan amount B.) Transferable C.) Optional D.) Required by the lender - CORRECT ANSWER 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 - CORRECT ANSWER 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 - CORRECT ANSWER A.) Simultaneous issue A shrubbery hedge is one example of an: A.) Encumbrance B.) Easement C.) Entitlement