NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
ARM - answerA variable-rate mortgage, adjustable-rate mortgage (ARM), or
tracker mortgage is a
mortgage loan with the interest rate on the note periodically adjusted based on
an index which
reflects the cost to the lender of borrowing on the credit markets.
APR - answerThe term annual percentage rate of charge (APR), corresponding
sometimes to a
nominal APR and sometimes to an effective APR (EAPR), is the interest rate for a
whole year
(annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage
loan, credit card,
etc. It is a finance charge expressed as an annual rate. Those terms have formal,
legal definitions in
some countries or legal jurisdictions, but in the United States:
The nominal APR is the simple-interest rate (for a year).
The effective APR is the fee+compound interest rate (calculated across a year).
, NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
APOR - answerThe Average Prime Offer Rate (APOR) is an annual percentage
rate that is based
on average interest rates, fees, and other terms on mortgages offered to highly
qualified
borrowers. ... A subordinate-lien mortgage is generally "higher-priced" if the
APR of this mortgage
is 3.5 percentage points or more higher than the APOR.
ATR - answerThe ATR/QM rule requires you to make a reasonable, good-faith
determination that
a member has the ability to repay a covered mortgage loan before or when you
consummate the
loan. You must consider, at a minimum, eight specific underwriting standards
when making an
ATR determination.
CLTV - answerThe combined loan-to-value (CLTV) ratio is the ratio of all secured
loans on a
, NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
property to the value of a property. Lenders use the CLTV ratio to determine a
prospective home
buyer's risk of default when more than one loan is used.
DU - answerDesktop underwriting, or DU, is an automated approval system that
calculates
whether a loan meets Fannie Mae or, in some cases, Federal Housing Authority
(FHA) loan
requirements. A DU evaluates a borrower's risk of delinquency by
comprehensively evaluating
several risk factors.
DTI - answerHere are some guidelines about what is a good debt-to-income
ratio: The "ideal" DTI
ratio is 36% or less. At least, that's the common financial advice of the "28/36
rule." This guideline
suggests keeping total monthly debt costs at or below 36% of your income, and
housing costs at or
Complete Solutions
ARM - answerA variable-rate mortgage, adjustable-rate mortgage (ARM), or
tracker mortgage is a
mortgage loan with the interest rate on the note periodically adjusted based on
an index which
reflects the cost to the lender of borrowing on the credit markets.
APR - answerThe term annual percentage rate of charge (APR), corresponding
sometimes to a
nominal APR and sometimes to an effective APR (EAPR), is the interest rate for a
whole year
(annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage
loan, credit card,
etc. It is a finance charge expressed as an annual rate. Those terms have formal,
legal definitions in
some countries or legal jurisdictions, but in the United States:
The nominal APR is the simple-interest rate (for a year).
The effective APR is the fee+compound interest rate (calculated across a year).
, NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
APOR - answerThe Average Prime Offer Rate (APOR) is an annual percentage
rate that is based
on average interest rates, fees, and other terms on mortgages offered to highly
qualified
borrowers. ... A subordinate-lien mortgage is generally "higher-priced" if the
APR of this mortgage
is 3.5 percentage points or more higher than the APOR.
ATR - answerThe ATR/QM rule requires you to make a reasonable, good-faith
determination that
a member has the ability to repay a covered mortgage loan before or when you
consummate the
loan. You must consider, at a minimum, eight specific underwriting standards
when making an
ATR determination.
CLTV - answerThe combined loan-to-value (CLTV) ratio is the ratio of all secured
loans on a
, NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
property to the value of a property. Lenders use the CLTV ratio to determine a
prospective home
buyer's risk of default when more than one loan is used.
DU - answerDesktop underwriting, or DU, is an automated approval system that
calculates
whether a loan meets Fannie Mae or, in some cases, Federal Housing Authority
(FHA) loan
requirements. A DU evaluates a borrower's risk of delinquency by
comprehensively evaluating
several risk factors.
DTI - answerHere are some guidelines about what is a good debt-to-income
ratio: The "ideal" DTI
ratio is 36% or less. At least, that's the common financial advice of the "28/36
rule." This guideline
suggests keeping total monthly debt costs at or below 36% of your income, and
housing costs at or
