MORTGAGE EDUCATORS ALL EXAM QUESTIONS WITH
ANSWERS 2025/2026 GRADED A+
In the mortgage business, what does the word "term" refer to? - The length of time of
the loan
What is a mortgage or trust deed? - The document that creates a lien against the
property
Negative amortization happens when the: - payment is less than the required interest
amount and the loan balance increases.
An interest rate at PAR would be? - An interest rate with no YSP
When FNMA or FHLMC loan limits are exceeded, the loan is considered to be
___________. - Jumbo
Which of the following would NOT be an acceptable trust deed rider? - Mortgage
insurance rider
Which of the following is true about the index used in an ARM? - The index rate can
change on the loan after settlement
An adjustable rate mortgage has two components to it, the index and the margin. After
closing which of these can change? - Index only
A borrower who qualifies for B, C or D paper or less favorable terms and interest rates
is referred to as a: - subprime borrower
Two people obtain a loan and buy a home, taking ownership as joint tenants. Which of
the following would NOT be true? - Each owns 100%
When using the comparison approach, the appraiser is attempting to: - adjust the
comparable to the subject property.
If a sheriff's sale is held, the document that dictated the foreclosure sale was a: -
mortgage.
The cost approach of an appraisal is used for all of the following EXCEPT: - To
determine the cost of income, on a rental property
Which of the following is NOT true concerning SRP? - Brokers may receive an SRP.
Which of the following documents would contain the details about the loan amount,
payment, when payments are due, late penalty, interest rate, etc.? - Promissory note
, When there is a clause in a mortgage that requires the borrower to pay an extra fee if
the loan is paid off early, it is known as a: - prepayment penalty
As it relates to a loan and after foreclosure, the right of redemption is the right of: - the
borrower to redeem their property during the redemption period.
How much is 1 discount point? - 1% of the loan amount
A balloon loan is best described as: - a loan that is paid off in one lump sum.
How does the secondary market help lenders? - They purchase loans.
What are FHA loan limits based on? - The lesser of the sales price or appraised value
after the down payment and before upfront mortgage insurance
A loan paid off in a lump sum after a fixed amount of time is called? - A balloon loan
The main difference between FHA and VA is that VA: - guarantees the loan whereas
FHA insures the loan.
The best description of LTV is a percentage of what? - The amount borrowed compared
to the sales price or the appraised value
What are the Fannie Mae / Freddie Mac loan limits as of 2017? - $424,000
Which of the following would NOT be a red flag of the possibility of loan fraud? - A
REALTOR® is involved in the transaction.
What is the amount of money that VA guarantees called? - Entitlement
Whenever the loan is an ARM, Federal regulations require which of the following? -
Disclosure of the index used
What is a discount point? - A fee to permanently reduce the interest rate on a loan
What is the legal amount that an ARM can increase in one year? - There is no legal
amount
How does an ARM adjust? - Index plus the margin
What makes a mortgage loan a second mortgage? - It is recorded in second position.
When do you give an ARM disclosure? - When the rate may change at any time in the
life of the loan.
What is the primary purpose of the primary market? - To originate loans
ANSWERS 2025/2026 GRADED A+
In the mortgage business, what does the word "term" refer to? - The length of time of
the loan
What is a mortgage or trust deed? - The document that creates a lien against the
property
Negative amortization happens when the: - payment is less than the required interest
amount and the loan balance increases.
An interest rate at PAR would be? - An interest rate with no YSP
When FNMA or FHLMC loan limits are exceeded, the loan is considered to be
___________. - Jumbo
Which of the following would NOT be an acceptable trust deed rider? - Mortgage
insurance rider
Which of the following is true about the index used in an ARM? - The index rate can
change on the loan after settlement
An adjustable rate mortgage has two components to it, the index and the margin. After
closing which of these can change? - Index only
A borrower who qualifies for B, C or D paper or less favorable terms and interest rates
is referred to as a: - subprime borrower
Two people obtain a loan and buy a home, taking ownership as joint tenants. Which of
the following would NOT be true? - Each owns 100%
When using the comparison approach, the appraiser is attempting to: - adjust the
comparable to the subject property.
If a sheriff's sale is held, the document that dictated the foreclosure sale was a: -
mortgage.
The cost approach of an appraisal is used for all of the following EXCEPT: - To
determine the cost of income, on a rental property
Which of the following is NOT true concerning SRP? - Brokers may receive an SRP.
Which of the following documents would contain the details about the loan amount,
payment, when payments are due, late penalty, interest rate, etc.? - Promissory note
, When there is a clause in a mortgage that requires the borrower to pay an extra fee if
the loan is paid off early, it is known as a: - prepayment penalty
As it relates to a loan and after foreclosure, the right of redemption is the right of: - the
borrower to redeem their property during the redemption period.
How much is 1 discount point? - 1% of the loan amount
A balloon loan is best described as: - a loan that is paid off in one lump sum.
How does the secondary market help lenders? - They purchase loans.
What are FHA loan limits based on? - The lesser of the sales price or appraised value
after the down payment and before upfront mortgage insurance
A loan paid off in a lump sum after a fixed amount of time is called? - A balloon loan
The main difference between FHA and VA is that VA: - guarantees the loan whereas
FHA insures the loan.
The best description of LTV is a percentage of what? - The amount borrowed compared
to the sales price or the appraised value
What are the Fannie Mae / Freddie Mac loan limits as of 2017? - $424,000
Which of the following would NOT be a red flag of the possibility of loan fraud? - A
REALTOR® is involved in the transaction.
What is the amount of money that VA guarantees called? - Entitlement
Whenever the loan is an ARM, Federal regulations require which of the following? -
Disclosure of the index used
What is a discount point? - A fee to permanently reduce the interest rate on a loan
What is the legal amount that an ARM can increase in one year? - There is no legal
amount
How does an ARM adjust? - Index plus the margin
What makes a mortgage loan a second mortgage? - It is recorded in second position.
When do you give an ARM disclosure? - When the rate may change at any time in the
life of the loan.
What is the primary purpose of the primary market? - To originate loans
