SAFE MLO NMLS LICENSE 2026 ACTUAL
EXAM REVIEW WITH ACTUAL EXAM WITH
QUESTIONS AND CORRECT ANSWERS
GRADED A+
The process by which a mortgage lender makes a home loan and
records a mortgage against the borrower's real property as
security for repayment of the loan. Correct Answer Loan
Origination
The ratio between the unpaid principal amount of your loan, or
your credit limit in the case of a line of credit, and the appraised
value of your collateral. Expressed as a percentage. For example,
if you have an $80,000 first mortgage on a property with an
appraised value of $100,000, the LTV is 80% ($70,000 / $100,000
= 70%). Correct Answer Loan-to-Value Ratio (LTV)
The amount of time prior to closing that you can secure an
interest rate for your loan. Lock periods typically range from 30
days to more than 90 days. Generally, the longer the lock period,
the more you pay in points or interest. Correct Answer Lock
period
,The minimum profit the lender maintain on an ARM. At no point
will the rate adjust below the margin. Correct Answer Margin
The day on which the outstanding principal, interest and fees on a
loan must all be repaid. Correct Answer Maturity date
A legal document giving a lender a lien on real estate to secure
repayment of a loan. Mortgage loans generally run from 10 to 30
years, after which the loan is required to be paid off. Also called
deed of trust and/or security deed. Correct Answer Mortgage
Insurance obtained to protect the lender against default when the
borrower has very little equity in the home. Conventional loans
charge Private Mortgage Insurance (PMI) and FHA loans charge
Monthly Mortgage Insurance Premium (MIP) and Upfront
Mortgage Insurance Premium (UFMIP). Correct Answer Mortgage
insurance
A residential property with 2 to 4 individual housing units. Correct
Answer Multi-family residence (2 to 4 units)
The result when monthly payments don't cover all the interest due
on the loan. The unpaid interest is added to the unpaid balance,
which means the homebuyer will owe increasingly more than the
original amount of the loan. Correct Answer Negative amortization
,The sum of the existing credit line and the amount of additional
credit requested. Correct Answer New line amount
A loan that falls outside the conforming loan limits and guidelines.
Ex. Jumbo Loans. Correct Answer Nonconforming loan
Properties in which the owner does not live. Correct Answer Non-
owner occupied
A written agreement in which the signer promises to pay to a
named person or company a specific sum of money at a specified
date or on demand. AKA the Promissory Note. Correct Answer
Note
The interest rate stated in a mortgage note. This is also the rate
that an ARM starts at. Correct Answer Note rate
A formal written notice to a borrower that a default has occurred
and that legal action may be taken. Correct Answer Notice of
default
A type of adjustable-rate mortgage (ARM) that offers the borrower
a choice of 4 monthly payment options to help provide financial
flexibility to manage payments in rising rate markets and take
advantage of falling interest rates. Correct Answer Option ARM
, The date on which a loan is funded or disbursed. Correct Answer
Origination date
A fee imposed by a lender to cover certain processing expenses
in connection with making a mortgage loan. Usually a percentage
of the amount loaned (often 1%). The origination fee is stated in
the form of points. Correct Answer Origination fee
This form of income is earned when the borrower works more
than a specified period of time, typically 40 hours per week. This
is often more than what the borrower would make for working a
normal hour. Correct Answer Overtime Income
A property purchase transaction in which the property seller
provides all or part of the financing. Correct Answer Owner
financing
A property that the owner occupies as a principal residence.
Correct Answer Owner-occupied
As the name suggests, passive income is income that is collected
without doing any work. Examples of this form of income are
Social Security, Disability, Alimony, Child Support, etc. Correct
Answer Passive Income
EXAM REVIEW WITH ACTUAL EXAM WITH
QUESTIONS AND CORRECT ANSWERS
GRADED A+
The process by which a mortgage lender makes a home loan and
records a mortgage against the borrower's real property as
security for repayment of the loan. Correct Answer Loan
Origination
The ratio between the unpaid principal amount of your loan, or
your credit limit in the case of a line of credit, and the appraised
value of your collateral. Expressed as a percentage. For example,
if you have an $80,000 first mortgage on a property with an
appraised value of $100,000, the LTV is 80% ($70,000 / $100,000
= 70%). Correct Answer Loan-to-Value Ratio (LTV)
The amount of time prior to closing that you can secure an
interest rate for your loan. Lock periods typically range from 30
days to more than 90 days. Generally, the longer the lock period,
the more you pay in points or interest. Correct Answer Lock
period
,The minimum profit the lender maintain on an ARM. At no point
will the rate adjust below the margin. Correct Answer Margin
The day on which the outstanding principal, interest and fees on a
loan must all be repaid. Correct Answer Maturity date
A legal document giving a lender a lien on real estate to secure
repayment of a loan. Mortgage loans generally run from 10 to 30
years, after which the loan is required to be paid off. Also called
deed of trust and/or security deed. Correct Answer Mortgage
Insurance obtained to protect the lender against default when the
borrower has very little equity in the home. Conventional loans
charge Private Mortgage Insurance (PMI) and FHA loans charge
Monthly Mortgage Insurance Premium (MIP) and Upfront
Mortgage Insurance Premium (UFMIP). Correct Answer Mortgage
insurance
A residential property with 2 to 4 individual housing units. Correct
Answer Multi-family residence (2 to 4 units)
The result when monthly payments don't cover all the interest due
on the loan. The unpaid interest is added to the unpaid balance,
which means the homebuyer will owe increasingly more than the
original amount of the loan. Correct Answer Negative amortization
,The sum of the existing credit line and the amount of additional
credit requested. Correct Answer New line amount
A loan that falls outside the conforming loan limits and guidelines.
Ex. Jumbo Loans. Correct Answer Nonconforming loan
Properties in which the owner does not live. Correct Answer Non-
owner occupied
A written agreement in which the signer promises to pay to a
named person or company a specific sum of money at a specified
date or on demand. AKA the Promissory Note. Correct Answer
Note
The interest rate stated in a mortgage note. This is also the rate
that an ARM starts at. Correct Answer Note rate
A formal written notice to a borrower that a default has occurred
and that legal action may be taken. Correct Answer Notice of
default
A type of adjustable-rate mortgage (ARM) that offers the borrower
a choice of 4 monthly payment options to help provide financial
flexibility to manage payments in rising rate markets and take
advantage of falling interest rates. Correct Answer Option ARM
, The date on which a loan is funded or disbursed. Correct Answer
Origination date
A fee imposed by a lender to cover certain processing expenses
in connection with making a mortgage loan. Usually a percentage
of the amount loaned (often 1%). The origination fee is stated in
the form of points. Correct Answer Origination fee
This form of income is earned when the borrower works more
than a specified period of time, typically 40 hours per week. This
is often more than what the borrower would make for working a
normal hour. Correct Answer Overtime Income
A property purchase transaction in which the property seller
provides all or part of the financing. Correct Answer Owner
financing
A property that the owner occupies as a principal residence.
Correct Answer Owner-occupied
As the name suggests, passive income is income that is collected
without doing any work. Examples of this form of income are
Social Security, Disability, Alimony, Child Support, etc. Correct
Answer Passive Income
