POST LICENSE EXAM 25 MOCK TEST AND
STUDY MATERIAL WITH APPLICATION-BASED
LICENSING SCENARIOS
◉ What does a well inspection include?
Answer: - A flow test
- An examination of the equipment
- A test for bacteria, nitrates, minerals, water hardness, & other
concerns
◉ List the other home buying procedures a licensee should explain
to a buyer.
Answer: - Seller property disclosures
- Home warranties
- Surveys
- Title insurance
- Walk-through
- Closing process
◉ What is the difference between pre-qualification and pre-
approval?
,Answer: Pre-qualification is an informal process that a licensee or a
lender can do to determine how much of a mortgage a buyer can
afford. If done by a lender, the lender is not committing to making
the loan.
Pre-approval is a formal process done by a lender that goes through
most of the steps of a loan application process, after which the
lender will give the buyer a letter saying how much the buyer is
approved to borrow.
◉ What are the two main classifications for mortgages?
Answer: - Fixed-rate mortgage
- Adjustable-rate mortgage (ARM)
◉ What happens when borrowers make extra payments to principal
on a fixed-rate mortgage versus making extra payments on an ARM?
Answer: When borrowers make fixed extra payments to principal on
a fixed rate mortgage, they shorten the term but don't change the
payment.
When they make fixed extra payments to principal on an ARM, they
reduce the payment on rate adjustment dates, but don't change the
term.
◉ How can uninsured conventional loans be insured?
Answer: With a private mortgage insurance (PMI) policy
,◉ How is the Mortgage Payment Expense to Effective Income ratio
calculated?
Answer: The lender will take the total mortgage payment (principal
and interest, escrow deposits for taxes, hazard insurance, mortgage
insurance premium, homeowners' dues, etc.) and divide that
amount by the borrower's gross monthly income. The maximum
ratio to qualify is 31%.
◉ What are the two major reason why the FHA 203(b) loans are
most popular?
Answer: FHA 203(b) loans allow individuals to finance up to 97% of
their home loan and is also the only loan in which 100% of the
closing costs can be a gift from a relative, non-profit, or government
agency.
◉ What document must a veteran provide that shows the amount of
loan entitlement available to him or her?
Answer: A Certificate of Eligibility
◉ In a VA loan, what document shows approval of the value of the
property to be equal to or greater than the sales price?
Answer: A Certificate of Reasonable Value (CRV)
◉ What type of loan allows a buyer to borrow funds from the seller
in addition to the lender?
, Answer: Purchase Money Loan
◉ What type of loan allows a borrower who has an existing loan to
get another loan from a second lender without paying off the first
loan?
Answer: Wrap Around Mortgage
◉ How does a seller leaseback transaction work?
Answer: A person sells property & then leases or rents from the new
property owner.
The seller no longer owns the property, but lives in the property for
the length of time stated in the rental agreement.
◉ What is the major difference between a mortgage assignment
right and a mortgage novation right?
Answer: Assignment cannot transfer the mortgage obligation, but
novation can transfer both rights and obligations.
◉ Consensual dual agency requires the licensee to obtain the
written consent of:
Answer: the buyer and seller
◉ The two main classifications for mortgages are fixed-rate
mortgages and:
STUDY MATERIAL WITH APPLICATION-BASED
LICENSING SCENARIOS
◉ What does a well inspection include?
Answer: - A flow test
- An examination of the equipment
- A test for bacteria, nitrates, minerals, water hardness, & other
concerns
◉ List the other home buying procedures a licensee should explain
to a buyer.
Answer: - Seller property disclosures
- Home warranties
- Surveys
- Title insurance
- Walk-through
- Closing process
◉ What is the difference between pre-qualification and pre-
approval?
,Answer: Pre-qualification is an informal process that a licensee or a
lender can do to determine how much of a mortgage a buyer can
afford. If done by a lender, the lender is not committing to making
the loan.
Pre-approval is a formal process done by a lender that goes through
most of the steps of a loan application process, after which the
lender will give the buyer a letter saying how much the buyer is
approved to borrow.
◉ What are the two main classifications for mortgages?
Answer: - Fixed-rate mortgage
- Adjustable-rate mortgage (ARM)
◉ What happens when borrowers make extra payments to principal
on a fixed-rate mortgage versus making extra payments on an ARM?
Answer: When borrowers make fixed extra payments to principal on
a fixed rate mortgage, they shorten the term but don't change the
payment.
When they make fixed extra payments to principal on an ARM, they
reduce the payment on rate adjustment dates, but don't change the
term.
◉ How can uninsured conventional loans be insured?
Answer: With a private mortgage insurance (PMI) policy
,◉ How is the Mortgage Payment Expense to Effective Income ratio
calculated?
Answer: The lender will take the total mortgage payment (principal
and interest, escrow deposits for taxes, hazard insurance, mortgage
insurance premium, homeowners' dues, etc.) and divide that
amount by the borrower's gross monthly income. The maximum
ratio to qualify is 31%.
◉ What are the two major reason why the FHA 203(b) loans are
most popular?
Answer: FHA 203(b) loans allow individuals to finance up to 97% of
their home loan and is also the only loan in which 100% of the
closing costs can be a gift from a relative, non-profit, or government
agency.
◉ What document must a veteran provide that shows the amount of
loan entitlement available to him or her?
Answer: A Certificate of Eligibility
◉ In a VA loan, what document shows approval of the value of the
property to be equal to or greater than the sales price?
Answer: A Certificate of Reasonable Value (CRV)
◉ What type of loan allows a buyer to borrow funds from the seller
in addition to the lender?
, Answer: Purchase Money Loan
◉ What type of loan allows a borrower who has an existing loan to
get another loan from a second lender without paying off the first
loan?
Answer: Wrap Around Mortgage
◉ How does a seller leaseback transaction work?
Answer: A person sells property & then leases or rents from the new
property owner.
The seller no longer owns the property, but lives in the property for
the length of time stated in the rental agreement.
◉ What is the major difference between a mortgage assignment
right and a mortgage novation right?
Answer: Assignment cannot transfer the mortgage obligation, but
novation can transfer both rights and obligations.
◉ Consensual dual agency requires the licensee to obtain the
written consent of:
Answer: the buyer and seller
◉ The two main classifications for mortgages are fixed-rate
mortgages and:
