MLO Licensing Test (2024) Exam Questions and Answers 100% Pass

©THESTAR 2025 ALL RIGHTS RESERVED




MLO Licensing Test (2024) Exam Questions
and Answers 100% Pass



Income of self-employed applicants - ANS a self-employed applicant must show that he or
she has maintained an income for two years in order to qualify for a mortgage loan.
-Tax returns for the past two years
-A year-to-date profit and loss statement
-Balance sheets for the past two years
-A self-employed income analysis



Informational Disclosures to Educate the Consumer - ANS -Your Home Loan Toolkit: A Step-
by-Step Guide: RESPA
Consumer Handbook on Adjustable-Rate -Mortgages (CHARM) Booklet: required by TILA within
three business days of application for all ARMs
-When Your Home Is on the Line: What You Should Know about Home Equity Lines of Credit:
this booklet is required by TILA
-List of homeownership counseling organizations: RESPA



Disclosures to Inform the Consumer about the Costs of a Loan (Pre-Closing) - ANS Loan
Estimate,
Closing Disclosure,
Affiliate Business Arrangement,
Re-disclosure of APR (3d prior to closing)

, ©THESTAR 2025 ALL RIGHTS RESERVED

Disclosures to Inform the Consumer about the Costs of a Loan (Post-Closing) - ANS Initial
Escrow Account Statement,
Annual Escrow statement,
Escrow Closing notice,
Initial Rate change disclosure



Disclosures to Advise Consumer of Risky Lending Terms or Agreements - ANS Balloon
Payment Notice,
Notice regarding insurance premiums,
Notice that completion of loan application and receipt of disclosure does not obligate borrower
to complete transaction



Disclosures to Alert Consumers of Their Rights - ANS Notice of Right to Receive Appraisal
Report (3d),
Notice Regarding Monitoring Programs (ECOA),
Notice of Right to Rescind (TILA),
Notice of Right to Cancel PMI (HPA),
Notice of Right to Receive Credit Score and to Dispute Its Accuracy,
Notice of Right to Financial Privacy and Right to Opt Out of the Sharing of Personal Information
(GLB)



Disclosures to Alert Consumers about the Status of a Loan Application - ANS Notice of
Adverse action
Action taken
Incomplete application
(all 30d)

, ©THESTAR 2025 ALL RIGHTS RESERVED

Disclosures Relating to Loan Servicing - ANS Mortgage Servicing Disclosure Statement
(RESPA, 3d),
Servicing Transfer Statement (RESPA, 15d)



Income calculation for hourly pay... - ANS {base rate} x {hours} = {weekly income}
{OT rate} x {OT hours} = {OT weekly income}
{weekly base} + {OT income} = {weekly income}
{weekly income} × {weeks worked} = {annual income}
{annual income} ÷ 12 = {monthly income}



Income calculation for bi-weekly salary - ANS {bi-weekly salary} x 26 = {annual income}
{annual income} ÷ 12 = {monthly income}


There is a difference between bi-weekly payments of salary and semi-monthly payments. While
a bi-weekly payroll has 26 pay periods, one that is semi-monthly has 24 pay periods.



Income calculation for semi-monthly - ANS There is a difference between bi-weekly
payments of salary and semi-monthly payments. While a bi-weekly payroll has 26 pay periods,
one that is semi-monthly has 24 pay periods.


{bi-weekly salary} x 24 = {annual income} {annual income} ÷ 12 = {monthly income}



Income calculation for annual salary - ANS {annual income} ÷ 12 = {monthly income}



Income calculation for self-employed - ANS {year one income} + {year two income} = {income
base}
{income base} ÷ 24 = {monthly income}

, ©THESTAR 2025 ALL RIGHTS RESERVED

A loan applicant applies for a mortgage to purchase a home which the seller has agreed to sell
for $350,000. The purchase price is $5,000 less than the home's appraised value of $355,000.
The loan applicant has savings of $70,000 to use for a down payment.



Find the LTV and Loan amount - ANS {Purchase Price} - {Down Payment} = {Mortgage
Amount}
{$350,000} - {$70,000} = {$280,000}


{Amount of Mortgage} ÷ {Purchase Price} = {LTV} {$280,000} ÷ {$350,000} = {80%}



Monthly Housing Expense - ANS PITI
Principal Interest Taxes Insurance


Used in calc. Front End/Housing ratio



LTV over 80% - ANS Fannie/Freddie will not purchase this loan unless borrower purchases
mortgage insurance



CLTV - ANS {(First mortgage + Second mortgage)} ÷ {Appraised value of home} = {CLTV}


Tom is applying for a second mortgage loan for $60,000. He has a $200,000 mortgage loan on
his home, which has an appraised value of $310,000. In order to determine Tom's CLTV, the
lender completes the following calculation: - ANS {$200,000 + $60,000} / {$310,000} = 84%
Because Tom's CLTV is more than 80%, the lender imposes a slightly higher interest rate on the
second mortgage loan.



HLTV (define) - ANS ratio determined when the borrower has a first mortgage and a home
equity line of credit with the balance not fully drawn