NMLS MLO Practice Test Questions and Answers

NMLS MLO Practice Test Questions and Answers What is the term used that gives someone the right to use a portion of another person's land for a specific purpose? a. Warranty Deed b. Easement c. Road Maintenance Agreement d. Homestead - Answer-b. Easement Which statement is NOT true regarding using a power of attorney on a mortgage transaction? a. They can be used on a purchase of a second home b. They can be used on a cash-out refinance of an owner-occupied property c. They can be used on a rate and term refinance of an investment property d. They must be property specific - Answer-b. They can be used on a cash-out refinance of an owner-occupied property What would NOT be considered a loan origination fee? a. Application Fee b. Processing Fee c. Appraisal Fee d. Administration Fee - Answer-c. Appraisal Fee The note includes all of the following EXCEPT a. The interest rate b. The monthly amount for taxes and insurance c. They payment due date d. The amount owed on the loan - Answer-b. The monthly amount for taxes and insurance A borrower closed on a refinance of an owner-occupied property on a Tuesday, May 5. What day will the loan fund? a. Wednesday, May 6 b. Thursday, May 7 c. Friday, May 8 d. Monday, May 11 - Answer-d. Monday, May 11 A borrower is getting a mortgage for $175,000 with a loan to value of 95%. The mortgage insurance rate is 0.53%. What is the monthly mortgage insurance premium? a. $73.42 b. $77.29 c. $78.59 d. $92.75 - Answer-b. $77.29 If a borrower is purchasing a $210,000 home and is required to have a 5% down payment, what is the dollar amount of the down payment? a. $9,950 b. $9,975 c. $10,000 d. $10,500 - Answer-d. $10,500 What is the loan to value of a mortgage that had a purchase price of $425,000, an appraised value of $415,000, and a down payment of $63,950? a. $82% b. 84% c. 85% d. 87% - Answer-d. 87% A borrower makes $124,800 per year. The mortgage payment is $1,805 per month, and does not include an escrow account. The annual property taxes are $2,400, and the homeowners insurance premium is $900 per year. What is their housing ratio? a. 17% b. 20% c. 22% d. 24% - Answer-b. 20% What approach is MOST often used to determine a property's value on a residential appraisal? a. Cost Approach b. Income Approach c. Sales Comparison/Market Approach d. Base Value Approach - Answer-c. Sales Comparison/Market Approach Once an application is received, what is the frame to inform a borrower of the right to receive an appraisal? a. 3 business days b. 5 business days c. 7 business days d. 14 business days - Answer-a. 3 business days What is the difference between a full title report and a preliminary title report? a. A preliminary title report is issued prior to closing, and the full title report is issued after closing b. A preliminary title report is required on purchases, and a full title report is required on refinances c. A preliminary title report shows the current owner all current liens, and a full title report includes the same information plus all the transfers of ownership over the last 30 years or more d. A preliminary title report is only required on cash-only transactions, and a full title report is only requested on transactions that include a mortgage - Answer-c. A preliminary title report shows the current owner all current liens, and a full title report includes the same information plus all the transfers of ownership over the last 30 years or more A borrower is purchasing a home for $400,000, with a 10% down payment. The lender is charging 1.75% in discount points. How much will that cost the borrower? a. $5,5400 b. $5,600 c. $6,300 d. $7,000 - Answer-c. $6,300 Which description is true regarding discount points? a. A fee paid to a lender for a lower interest rate b. A fee paid to a lender for reduced closing costs c. A fee paid to a lender only on fixed-rate mortgages d. A fee paid to a lender only on adjustable rate mortgages - Answer-a. A fee paid to a lender for a lower interest rate Which statement is NOT true regarding per diem interest? a. It is the daily interest on a mortgage that is outside of the regular prepayment schedule b. It is a factor only on adjustable rate mortgages c. It is paid for at the mortgage closing d. It can be a credit back to a borrower at closing - Answer-b. It is a factor only on adjustable rate mortgages What is the standard due date and grace period for a mortgage payment? a. Due on the first of the month with a 5-day grace period b. Due on the fifth of the month with a 5-day grace period c. Due on the first of the month with a 15-day grace period d. Due on the fifth of the month with a 15-day grace period - Answer-c. Due on the first of the month with a 15-day grace period What would be considered an example of redlining? a. Denying financial services based on a particular neighborhood b. Denying financial services based on a certain credit score c. Denying financial services based on a minimum income d. Denying financial services based on a lack of assets - Answer-a. Denying financial services based on a particular neighborhood A mortgage lender pays a realtor $500 for referring him or her to a borrower. According to the Real Estate Settlement and Procedures Act (RESPA), what would this be called? a. A Referral Fee b. A Gift c. A Commission d. A Kickback - Answer-d. A kickback A mortgage loan originator has taken an application for an owner-occupied property. The borrower has indicated that he or she now does not intend to occupy the property. If the MLO does not change the occupancy type of the subject property, what is this considered? a. A clerical error b. A benefit to the borrower c. Occupancy fraud d. Nonowner occupied - Answer-c. Occupancy fraud