TEXAS PRE-LICENSE - REAL ESTATE FINANCE EXAM
QUESTIONS UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS
Question:
1. What is a mortgage banker?
Answer:
The correct answer is that a mortgage banker is an entity or person who originates and services mortgage
loans using their own funds. They usually provide financing on behalf of large investors.
Question:
2. Eloise's loan is neither insured by the government nor guaranteed by the government. Which of these
BEST describes the kind of loan she has?
Answer:
Conventional loans are neither guaranteed nor insured by the government. Conforming loans CAN be
conventional loans, but they must meet other criteria as well.
Question:
3. For a loan to fall under RESPA, it has to be what is called a(n):
Answer:
federally related mortgage loan
Question:
4. Why would a lender want to sell their loans on the secondary mortgage market?
Answer:
Selling their loans allows them to get money faster.
Question:
5. Under what conditions could a lender seek a deficiency judgment?
Answer:
If a borrower defaults, and the sale of the foreclosed home doesn't cover the loan and expenses of
foreclosure, the lender can seek a deficiency judgment.
Question:
6. What does this formula solve for: (PITI + Long-term liabilities) ÷ Gross monthly income?
Answer:
total debt service ratio
Question:
7. Which of the following institutions has 11 districts and the purpose to support residential mortgage
lending and related community investment?
Answer:
Federal Home Loan Bank System
, Question:
8. What is a back-end ratio?
Answer:
a person's total monthly expenses divided by their monthly income.
Question:
9. Which of these statements most accurately describes the 203(b) FHA loan?
Answer:
It is the most popular kind of FHA loan.
Question:
10. Which of these actions would constitute actual notice?
Answer:
No, recording a deed creates constructive notice. The answer is that Christine looking up a deed creates
actual notice.
Question:
11. How does the VA pay for its loan guarantee program?
Answer:
by charging a funding fee
Question:
12. Which of the following is one of the federal government's monetary powers?
Answer:
lowering the interest rate for member banks by a half percentage point is an example of the federal
government's monetary powers.
Question:
13. Ramsey is considering an ARM with an initial rate of 5.13%. The margin is 2%, and the initial index
rate is 3.13% The initial rate will adjust every four years. The lifetime cap is 3%. What is the highest rate
Ramsey could pay?
Answer:
5.13% plus the lifetime cap of 3% is 8.13%.
Question:
14. Termite infestations, mold problems, a falling-in roof, lead-based paint, asbestos, and flood damage are
all attributes of what kind of property, according to lender classifications?
Answer:
a physically distressed property
Question:
15. What happens to a borrower's PMI when the equity in their property reaches 22%?
Answer:
the PMI is automatically removed. The borrower doesn't have to be found credit-worthy.
Question:
16. What is the main difference between credit unions and banks?
QUESTIONS UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS
Question:
1. What is a mortgage banker?
Answer:
The correct answer is that a mortgage banker is an entity or person who originates and services mortgage
loans using their own funds. They usually provide financing on behalf of large investors.
Question:
2. Eloise's loan is neither insured by the government nor guaranteed by the government. Which of these
BEST describes the kind of loan she has?
Answer:
Conventional loans are neither guaranteed nor insured by the government. Conforming loans CAN be
conventional loans, but they must meet other criteria as well.
Question:
3. For a loan to fall under RESPA, it has to be what is called a(n):
Answer:
federally related mortgage loan
Question:
4. Why would a lender want to sell their loans on the secondary mortgage market?
Answer:
Selling their loans allows them to get money faster.
Question:
5. Under what conditions could a lender seek a deficiency judgment?
Answer:
If a borrower defaults, and the sale of the foreclosed home doesn't cover the loan and expenses of
foreclosure, the lender can seek a deficiency judgment.
Question:
6. What does this formula solve for: (PITI + Long-term liabilities) ÷ Gross monthly income?
Answer:
total debt service ratio
Question:
7. Which of the following institutions has 11 districts and the purpose to support residential mortgage
lending and related community investment?
Answer:
Federal Home Loan Bank System
, Question:
8. What is a back-end ratio?
Answer:
a person's total monthly expenses divided by their monthly income.
Question:
9. Which of these statements most accurately describes the 203(b) FHA loan?
Answer:
It is the most popular kind of FHA loan.
Question:
10. Which of these actions would constitute actual notice?
Answer:
No, recording a deed creates constructive notice. The answer is that Christine looking up a deed creates
actual notice.
Question:
11. How does the VA pay for its loan guarantee program?
Answer:
by charging a funding fee
Question:
12. Which of the following is one of the federal government's monetary powers?
Answer:
lowering the interest rate for member banks by a half percentage point is an example of the federal
government's monetary powers.
Question:
13. Ramsey is considering an ARM with an initial rate of 5.13%. The margin is 2%, and the initial index
rate is 3.13% The initial rate will adjust every four years. The lifetime cap is 3%. What is the highest rate
Ramsey could pay?
Answer:
5.13% plus the lifetime cap of 3% is 8.13%.
Question:
14. Termite infestations, mold problems, a falling-in roof, lead-based paint, asbestos, and flood damage are
all attributes of what kind of property, according to lender classifications?
Answer:
a physically distressed property
Question:
15. What happens to a borrower's PMI when the equity in their property reaches 22%?
Answer:
the PMI is automatically removed. The borrower doesn't have to be found credit-worthy.
Question:
16. What is the main difference between credit unions and banks?
