Mortgage NMLS Exam Question with correct answer 2023

Mortgage NMLS Exam Question with correct answer 2023Annual Percentage Rate (APR) Consumer's true annual cost of borrowing funds according to the Federal Truth-in-Lending Act. Calculates an effective interest rate based on most of a loan's up-front fees and the stated annual interest rate. Closing Process whereby a seller delivers ownership rights in real property to the buyer. May also describe the completion of the loan process where the borrower receives use of the funds from the lender in return for promising to repay the loan and allowing the lender to place a lien on the real property. Closing Costs Fees and costs associated with obtaining loans and purchasing real estate above the sale price of the real property. Typically consist of fees paid to the government, lenders, loan originators, appraisers, real estate brokers, surveyors, inspectors, title companies, and attorneys. The sales contract dictates which ones are paid by the buyer and seller. Deed of Trust Legal document between lender and borrower (aka the trustor) which is used in some states instead of a mortgage to transfer a property's legal title to a neutral third party (trustee) to secure the repayment of loan. Discount Points Fees charged by a lender to borrowers at closing to lower the stated interest rate and the interest portion of each monthly payment. Ethics Set of values, conduct, and principles that consistently guide our behavior and decisions to deliver fair and honest service to all parties Equity Market value of a property in excess of the amount owed by the borrower Home Equity Line of Credit (HELOC) Type of loan based on a secured by the value of the home that exceeds the amount already owed by the borrower to other more senior lien holders. Typically have variable interest rates and are open-ended - funds can be borrowed and repaid over and over again. Home Equity Loan Loan based on the difference between the value of the home and the amount owed Investor Person or entity that funds the loan, aka a lender or mortgagee Loan Originator (MLO) Licensed individual working for a lender or acting as an independent contractor to a mortgage broker who takes a residential mortgage loan application and negotiates terms of a loan for compensation or gain. Loan Servicing Collecting a borrower's monthly payments and disbursing payments to the current owner of the loan, disbursing taxes and insurance payments when due, handling mailings, monitoring liens or encumbrances, making sure a homeowner has sufficient insurance to protect lender's interest, and handling a foreclosure when necessary. Mortgage (Contract) Legal document signed by all owners that pledge their real property as security for a loan. Mortgage Banker (Mortgage Lender) Licensed entity that may originate, close, fund, sell and/or service the loan Mortgage Broker (New Definition) Business licensed to facilitate the making of a loan between a borrower and a lender for compensation. Broker originates the loan, but does not close or provide funds for loan. Mortgage Brokerage Fee Compensation paid for mortgage broker services. Include fees paid to the licensed mortgage broker business by the borrower and/or fees and commissions paid by the lender for originating the loan. Mortgagee Lender or investor providing the funds for the loan in exchange for both the borrower's promise to repay and his permission to place a lien on his real property. Mortgage Fraud Any means used by anyone in