TEXAS PRE-LICENSE - REAL ESTATE FINANCE PRACTICE
EXAM QUESTIONS AND ANSWERS | 2025/2026
UPDATE | WITH COMPLETE SOLUTION
What is a mortgage banker? Answer - The correct answer is that a mortgage
banker is an entity or person who originates and services mortgage loans using
their own funds. They usually provide financing on behalf of large investors.
Eloise's loan is neither insured by the government nor guaranteed by the
government. Which of these BEST describes the kind of loan she has? Answer -
Conventional loans are neither guaranteed nor insured by the government.
Conforming loans CAN be conventional loans, but they must meet other
criteria as well.
For a loan to fall under RESPA, it has to be what is called a(n): Answer -
federally related mortgage loan
Why would a lender want to sell their loans on the secondary mortgage
market? Answer - Selling their loans allows them to get money faster.
Under what conditions could a lender seek a deficiency judgment? Answer - If
a borrower defaults, and the sale of the foreclosed home doesn't cover the
loan and expenses of foreclosure, the lender can seek a deficiency judgment.
What does this formula solve for: (PITI + Long-term liabilities) ÷ Gross monthly
income? Answer - total debt service ratio
, Which of the following institutions has 11 districts and the purpose to support
residential mortgage lending and related community investment? Answer -
Federal Home Loan Bank System
What is a back-end ratio? Answer - a person's total monthly expenses divided
by their monthly income.
Which of these statements most accurately describes the 203(b) FHA loan?
Answer - It is the most popular kind of FHA loan.
Which of these actions would constitute actual notice? Answer - No, recording
a deed creates constructive notice. The answer is that Christine looking up a
deed creates actual notice.
How does the VA pay for its loan guarantee program? Answer - by charging a
funding fee
Which of the following is one of the federal government's monetary powers?
Answer - lowering the interest rate for member banks by a half percentage
point is an example of the federal government's monetary powers.
Ramsey is considering an ARM with an initial rate of 5.13%. The margin is 2%,
and the initial index rate is 3.13% The initial rate will adjust every four years.
The lifetime cap is 3%. What is the highest rate Ramsey could pay? Answer -
5.13% plus the lifetime cap of 3% is 8.13%.
Termite infestations, mold problems, a falling-in roof, lead-based paint,
asbestos, and flood damage are all attributes of what kind of property,
according to lender classifications? Answer - a physically distressed property
EXAM QUESTIONS AND ANSWERS | 2025/2026
UPDATE | WITH COMPLETE SOLUTION
What is a mortgage banker? Answer - The correct answer is that a mortgage
banker is an entity or person who originates and services mortgage loans using
their own funds. They usually provide financing on behalf of large investors.
Eloise's loan is neither insured by the government nor guaranteed by the
government. Which of these BEST describes the kind of loan she has? Answer -
Conventional loans are neither guaranteed nor insured by the government.
Conforming loans CAN be conventional loans, but they must meet other
criteria as well.
For a loan to fall under RESPA, it has to be what is called a(n): Answer -
federally related mortgage loan
Why would a lender want to sell their loans on the secondary mortgage
market? Answer - Selling their loans allows them to get money faster.
Under what conditions could a lender seek a deficiency judgment? Answer - If
a borrower defaults, and the sale of the foreclosed home doesn't cover the
loan and expenses of foreclosure, the lender can seek a deficiency judgment.
What does this formula solve for: (PITI + Long-term liabilities) ÷ Gross monthly
income? Answer - total debt service ratio
, Which of the following institutions has 11 districts and the purpose to support
residential mortgage lending and related community investment? Answer -
Federal Home Loan Bank System
What is a back-end ratio? Answer - a person's total monthly expenses divided
by their monthly income.
Which of these statements most accurately describes the 203(b) FHA loan?
Answer - It is the most popular kind of FHA loan.
Which of these actions would constitute actual notice? Answer - No, recording
a deed creates constructive notice. The answer is that Christine looking up a
deed creates actual notice.
How does the VA pay for its loan guarantee program? Answer - by charging a
funding fee
Which of the following is one of the federal government's monetary powers?
Answer - lowering the interest rate for member banks by a half percentage
point is an example of the federal government's monetary powers.
Ramsey is considering an ARM with an initial rate of 5.13%. The margin is 2%,
and the initial index rate is 3.13% The initial rate will adjust every four years.
The lifetime cap is 3%. What is the highest rate Ramsey could pay? Answer -
5.13% plus the lifetime cap of 3% is 8.13%.
Termite infestations, mold problems, a falling-in roof, lead-based paint,
asbestos, and flood damage are all attributes of what kind of property,
according to lender classifications? Answer - a physically distressed property
