Chapter 11: Applying for a Residential
Loan (Colibri Real Estate) Exam 2025
With 100% Correct Answers
Which of the following is a primary market lender?
Federal Housing Administration
Mortgage banking company
Mortgage broker
Veterans Administration - correct answers ✔✔Mortgage banking company
A mortgage banker is a primary market lender, meaning that it originates loans directly to
property buyers. Under the traditional distinction between a mortgage banker and a mortgage
broker, a mortgage broker negotiates loans, bringing borrowers and lenders together for a fee,
but (unlike a mortgage banker) is not a lender.
A buyer asks a long-time agent about the difference between mortgage brokers and mortgage
bankers. The agent may give the buyer the traditional explanation that:
mortgage brokers provide actual loan funds, mortgage banks do not
mortgage brokers are merely loan agents who receive a commission
mortgage bankers originate loans themselves
Both B and C - correct answers ✔✔Both B and C
,Traditionally, mortgage bankers made loans, while mortgage brokers simply arranged loans with
other lenders. More recently, these distinctions have blurred and both mortgage brokers and
mortgage bankers are often referred to simply as mortgage companies.
Kelly is trying to buy a property from Ed, but only has 10% of the purchase price and is trying to
avoid paying private mortgage insurance. One way this could happen is if:
Ed will finance a portion of the sales price and accept second lien position, so that Kelly only has
to borrow 80% from the lender, who will keep first lien position
Ed will co-sign Kelly's loan
Ed gives Kelly a reverse equity mortgage
It's impossible; private mortgage insurance is always required if the borrower has less than 20%
for a downpayment - correct answers ✔✔Ed will finance a portion of the sales price and accept
second lien position, so that Kelly only has to borrow 80% from the lender, who will keep first
lien position
If Ed gives Kelly a purchase money mortgage for the portion of the downpayment she doesn't
have, and accepts second lien position, Kelly will only need to borrow 80% of the sales price
from the lender, thereby avoiding private mortgage insurance.
A lender who always originates and services loans on behalf of large investors or for resale on
the secondary market is called a _______________. - correct answers ✔✔mortgage banker
_______________ represent the largest source of investment funds in the United States. -
correct answers ✔✔commercial banks
,Nonprofit financial cooperatives that are controlled by their members are known as
_______________. - correct answers ✔✔credit unions
When _______________ started out in the nineteenth century, their lending activities were
mainly limited to home purchase loans. - correct answers ✔✔savings and loans
If the lender charges three points on a $100,000 loan, the borrower will be required to pay:
$300
$3,000
$30,000
$300,000 - correct answers ✔✔$3,000
Three points equals 3% of the loan amount. On a $100,000 loan, that's $3,000 ($100,000 × 3% =
$3,000).
A mortgage company charges three points on a $250,000 loan. How much is the charge?
$750
$2,250
$7,500
$22,500 - correct answers ✔✔$7,500
A point equals one percent of the loan amount. Three percent of $250,000 is $7,500 ($250,000
× 0.03 = $7,500).
B purchases a small commercial property, and he finances it with a 65% loan. The lender
charges 9.25% annual interest and three discount points. The discount points:
, increase the mortgage payments
decrease the annual percentage rate
increase the lender's upfront yield
increase the nominal interest rate - correct answers ✔✔increase the lender's upfront yield
Discount points are a percentage of the principal amount of a loan, collected by the lender at
the time the loan is originated, to give the lender an immediate yield over and above the
interest. While the discount points decrease the nominal (promissory note) interest rate, they
don't decrease the annual percentage rate; the APR takes the discount points into
consideration.
If the mortgage amount is $80,000 and the borrower paid $4,800 in discount points, how many
discount points were charged?
4
5
6
8 - correct answers ✔✔6
Divide the points paid by the loan amount to find what percentage was paid in points ($4,800 ÷
$80,000 = 0.06). Since one discount point is the same as one percent of the loan amount, the
borrower paid six discount points.
Loan (Colibri Real Estate) Exam 2025
With 100% Correct Answers
Which of the following is a primary market lender?
Federal Housing Administration
Mortgage banking company
Mortgage broker
Veterans Administration - correct answers ✔✔Mortgage banking company
A mortgage banker is a primary market lender, meaning that it originates loans directly to
property buyers. Under the traditional distinction between a mortgage banker and a mortgage
broker, a mortgage broker negotiates loans, bringing borrowers and lenders together for a fee,
but (unlike a mortgage banker) is not a lender.
A buyer asks a long-time agent about the difference between mortgage brokers and mortgage
bankers. The agent may give the buyer the traditional explanation that:
mortgage brokers provide actual loan funds, mortgage banks do not
mortgage brokers are merely loan agents who receive a commission
mortgage bankers originate loans themselves
Both B and C - correct answers ✔✔Both B and C
,Traditionally, mortgage bankers made loans, while mortgage brokers simply arranged loans with
other lenders. More recently, these distinctions have blurred and both mortgage brokers and
mortgage bankers are often referred to simply as mortgage companies.
Kelly is trying to buy a property from Ed, but only has 10% of the purchase price and is trying to
avoid paying private mortgage insurance. One way this could happen is if:
Ed will finance a portion of the sales price and accept second lien position, so that Kelly only has
to borrow 80% from the lender, who will keep first lien position
Ed will co-sign Kelly's loan
Ed gives Kelly a reverse equity mortgage
It's impossible; private mortgage insurance is always required if the borrower has less than 20%
for a downpayment - correct answers ✔✔Ed will finance a portion of the sales price and accept
second lien position, so that Kelly only has to borrow 80% from the lender, who will keep first
lien position
If Ed gives Kelly a purchase money mortgage for the portion of the downpayment she doesn't
have, and accepts second lien position, Kelly will only need to borrow 80% of the sales price
from the lender, thereby avoiding private mortgage insurance.
A lender who always originates and services loans on behalf of large investors or for resale on
the secondary market is called a _______________. - correct answers ✔✔mortgage banker
_______________ represent the largest source of investment funds in the United States. -
correct answers ✔✔commercial banks
,Nonprofit financial cooperatives that are controlled by their members are known as
_______________. - correct answers ✔✔credit unions
When _______________ started out in the nineteenth century, their lending activities were
mainly limited to home purchase loans. - correct answers ✔✔savings and loans
If the lender charges three points on a $100,000 loan, the borrower will be required to pay:
$300
$3,000
$30,000
$300,000 - correct answers ✔✔$3,000
Three points equals 3% of the loan amount. On a $100,000 loan, that's $3,000 ($100,000 × 3% =
$3,000).
A mortgage company charges three points on a $250,000 loan. How much is the charge?
$750
$2,250
$7,500
$22,500 - correct answers ✔✔$7,500
A point equals one percent of the loan amount. Three percent of $250,000 is $7,500 ($250,000
× 0.03 = $7,500).
B purchases a small commercial property, and he finances it with a 65% loan. The lender
charges 9.25% annual interest and three discount points. The discount points:
, increase the mortgage payments
decrease the annual percentage rate
increase the lender's upfront yield
increase the nominal interest rate - correct answers ✔✔increase the lender's upfront yield
Discount points are a percentage of the principal amount of a loan, collected by the lender at
the time the loan is originated, to give the lender an immediate yield over and above the
interest. While the discount points decrease the nominal (promissory note) interest rate, they
don't decrease the annual percentage rate; the APR takes the discount points into
consideration.
If the mortgage amount is $80,000 and the borrower paid $4,800 in discount points, how many
discount points were charged?
4
5
6
8 - correct answers ✔✔6
Divide the points paid by the loan amount to find what percentage was paid in points ($4,800 ÷
$80,000 = 0.06). Since one discount point is the same as one percent of the loan amount, the
borrower paid six discount points.
