NMLS MLO PRACTICE TEST WITH
100% CORRECT ANSWERS
What would be the interest-only payment on a $150,000 loan with an interest rate of
4.5%?
a. $560.00
b. $562.50
c. $625.00
d. $630.75 - Answer-b. $562.50
Who is NOT considered an acceptable gift donor on a conventional loan?
a. A close family friend
b. A spouse
c. A domestic partner
d. A cousin - Answer-a. A close family friend
On a Federal Housing Administration (FHA) loan, what is NOT an acceptable source to
verify income of a borrower who is currently employed?
a. Copies of the most recent paystub that show the borrowers year-to-date- income
b. W2s for the last 2 years along with the most recent paystub
c. Two months of bank statements showing a borrower's wages being direct deposited
d. A written verification from the employer that shows the borrowers income - Answer-c.
Two months of bank statements showing a borrower's wages being direct deposited
Unless there is a valid change of circumstance, what fee is subject to zero tolerance?
a. Property insurance premiums
b. The loan origination fee
c. Recording fees
d. The settlement fee - Answer-b. The loan origination fee
How soon does a loan estimate need to be issued to a consumer after a lender has
received an application?
a. 3 business days
b. 3 calendar days
c. 5 business days
d. 7 calendar days - Answer-a. 3 business days
What is NOT considered a valid change of circumstances?
a. Expiration of the original loan estimate
,b. An interest rate lock expiring
c. A final inspection fee based on the appraisal report
d. A change in the amount of a borrower's down payment - Answer-b. An interest rate
lock expiring
If a closing disclosure was issued to a borrower and signed on a Monday, what is the
earliest day he or she would be able to close on the mortgage?
a. Tuesday
b. Wednesday
c. Thursday
d. Friday - Answer-c. Thursday
Which of these NOT an acceptable asset that can be used for a borrower's reserves?
a. Checking account
b. Certificate of deposit
c. Proceeds from an unsecured loan
d. The cash value of a life insurance policy - Answer-c. Proceeds from an unsecured
loan
If a borrower works 40 hours a week and makes $21.00/hr, what is the monthly income?
a. $3,360
b. $3,640
c. $3,500
d. $3,920 - Answer-b. $3,640
If a borrower is paid hourly and works a different number of hours each week (not a
standard 40 hr/week), what would be an acceptable way to calculate their monthly
income?
a. Average the last 3 months of income?
b. Average the last 6 months of income
c. Average the year-to-date income
d. Average the year-to-date income along with prior years W2s - Answer-d. Average the
year-to-date income along with prior years W2s
In mortgage lending, what is the definition of capacity?
a. A borrower's ability to repay a mortgage along with other debt
b. The change from a borrower's current housing payment to the new mortgage
payment
c. The total amount of available assets for a down payment
d. The amount of rent needed on an investment property to offset the mortgage
payment - Answer-a. A borrower's ability to repay a mortgage along with other debt
What scenario would cause a verification of deposit (VOD) to be an unacceptable
source to verify an asset?
a. The account has been open for only 3 months
b. The account average balance is substantially higher than the current balance
, c. The account has a joint owner who is not on the loan
d. The current balance is substantially higher than the average balance - Answer-d. The
current balance is substantially higher than the average balance
What is the maximum amount of flood insurance available under the National Flood
Insurance Program?
a. $150,000
b. $250,000
c. $350,000
d. $450,000 - Answer-b. $250,000
What is the purpose of private mortgage insurance?
a. To pay off the loan if the primary or co-borrower dies
b. To protect the borrower if he or she falls behind on payments
c. To protect the lender if a borrower defaults on the mortgage
d. To cover payments if a borrower is injured and cannot work - Answer-c. To protect
the lender if a borrower defaults on the mortgage
A loan servicer is required to send an initial notice to a borrower at least ___ days
before it puts in effect force-places insurance.
a. 15
b. 30
c. 45
d. 60 - Answer-c. 45
Currently, what percentage of the loan amount is required as an upfront mortgage
insurance premium (UMIP) on a Federal Housing Administration (FHA) loan?
a. 1%
b. 1.5%
c. 1.75%
d. 2% - Answer-c. 1.75%
A Good Faith Estimate is not issued until a complete application is received from a
consumer. Which answer is NOT part of the list of information that qualifies as a
received application?
a. Consumer's social security number
b. Consumer's assets
c. Address of the property
d. The mortgage loan amount sought - Answer-b. Consumer's assets
Which type of loan is exempt from Real Estate Settlement Procedures Act (RESPA)?
a. A loan to finance a commercial warehouse
b. A reverse mortgage
c. A home equity line of credit
100% CORRECT ANSWERS
What would be the interest-only payment on a $150,000 loan with an interest rate of
4.5%?
a. $560.00
b. $562.50
c. $625.00
d. $630.75 - Answer-b. $562.50
Who is NOT considered an acceptable gift donor on a conventional loan?
a. A close family friend
b. A spouse
c. A domestic partner
d. A cousin - Answer-a. A close family friend
On a Federal Housing Administration (FHA) loan, what is NOT an acceptable source to
verify income of a borrower who is currently employed?
a. Copies of the most recent paystub that show the borrowers year-to-date- income
b. W2s for the last 2 years along with the most recent paystub
c. Two months of bank statements showing a borrower's wages being direct deposited
d. A written verification from the employer that shows the borrowers income - Answer-c.
Two months of bank statements showing a borrower's wages being direct deposited
Unless there is a valid change of circumstance, what fee is subject to zero tolerance?
a. Property insurance premiums
b. The loan origination fee
c. Recording fees
d. The settlement fee - Answer-b. The loan origination fee
How soon does a loan estimate need to be issued to a consumer after a lender has
received an application?
a. 3 business days
b. 3 calendar days
c. 5 business days
d. 7 calendar days - Answer-a. 3 business days
What is NOT considered a valid change of circumstances?
a. Expiration of the original loan estimate
,b. An interest rate lock expiring
c. A final inspection fee based on the appraisal report
d. A change in the amount of a borrower's down payment - Answer-b. An interest rate
lock expiring
If a closing disclosure was issued to a borrower and signed on a Monday, what is the
earliest day he or she would be able to close on the mortgage?
a. Tuesday
b. Wednesday
c. Thursday
d. Friday - Answer-c. Thursday
Which of these NOT an acceptable asset that can be used for a borrower's reserves?
a. Checking account
b. Certificate of deposit
c. Proceeds from an unsecured loan
d. The cash value of a life insurance policy - Answer-c. Proceeds from an unsecured
loan
If a borrower works 40 hours a week and makes $21.00/hr, what is the monthly income?
a. $3,360
b. $3,640
c. $3,500
d. $3,920 - Answer-b. $3,640
If a borrower is paid hourly and works a different number of hours each week (not a
standard 40 hr/week), what would be an acceptable way to calculate their monthly
income?
a. Average the last 3 months of income?
b. Average the last 6 months of income
c. Average the year-to-date income
d. Average the year-to-date income along with prior years W2s - Answer-d. Average the
year-to-date income along with prior years W2s
In mortgage lending, what is the definition of capacity?
a. A borrower's ability to repay a mortgage along with other debt
b. The change from a borrower's current housing payment to the new mortgage
payment
c. The total amount of available assets for a down payment
d. The amount of rent needed on an investment property to offset the mortgage
payment - Answer-a. A borrower's ability to repay a mortgage along with other debt
What scenario would cause a verification of deposit (VOD) to be an unacceptable
source to verify an asset?
a. The account has been open for only 3 months
b. The account average balance is substantially higher than the current balance
, c. The account has a joint owner who is not on the loan
d. The current balance is substantially higher than the average balance - Answer-d. The
current balance is substantially higher than the average balance
What is the maximum amount of flood insurance available under the National Flood
Insurance Program?
a. $150,000
b. $250,000
c. $350,000
d. $450,000 - Answer-b. $250,000
What is the purpose of private mortgage insurance?
a. To pay off the loan if the primary or co-borrower dies
b. To protect the borrower if he or she falls behind on payments
c. To protect the lender if a borrower defaults on the mortgage
d. To cover payments if a borrower is injured and cannot work - Answer-c. To protect
the lender if a borrower defaults on the mortgage
A loan servicer is required to send an initial notice to a borrower at least ___ days
before it puts in effect force-places insurance.
a. 15
b. 30
c. 45
d. 60 - Answer-c. 45
Currently, what percentage of the loan amount is required as an upfront mortgage
insurance premium (UMIP) on a Federal Housing Administration (FHA) loan?
a. 1%
b. 1.5%
c. 1.75%
d. 2% - Answer-c. 1.75%
A Good Faith Estimate is not issued until a complete application is received from a
consumer. Which answer is NOT part of the list of information that qualifies as a
received application?
a. Consumer's social security number
b. Consumer's assets
c. Address of the property
d. The mortgage loan amount sought - Answer-b. Consumer's assets
Which type of loan is exempt from Real Estate Settlement Procedures Act (RESPA)?
a. A loan to finance a commercial warehouse
b. A reverse mortgage
c. A home equity line of credit
