15

Question 1

Which repayment plan is a partially amortized loan?

Answer 1

Balloon

Question 2

Which of the following is not true about reverse annuity mortgages?

Answer 2

The loan must be repaid before the borrower’s death.

Question 3

How does a borrower use private mortgage insurance?

Answer 3

A borrower can get a conventional loan with a lower down payment by insuring the loan through private mortgage insurance.

Question 4

Seller James has taken back $20,000 as a second mortgage so Buyer Karl can qualify to buy the property. The $20,000 is what type of mortgage?

Answer 4

Purchase Money Mortgage

Question 5

What type of document does a homeowner sign when agreeing to a mortgage?

Answer 5

Promissory Note

Question 6

Which repayment plan is usually fixed-interest, long-term loans?

Answer 6

Amortized

Question 7

Typically, the interest rate on an ARM is based in part on

Answer 7

an index.

Question 8

What percent equity of the purchase price allows a borrower to request cancellation of PMI?

Answer 8

20%

Question 9

What is the lender’s right of assignment?

Answer 9

The lender may sell the mortgage.

Question 10

What type of loan is often used when a seller will not accept a property sale contingency?

Answer 10

Bridge Loan

Question 11

Which of the following is not a way in which a property with an existing mortgage can be sold?

Answer 11

Foreclosure

Question 12

Fred has an existing property mortgage, but seeks a second loan. What type of loan might help Fred?

Answer 12

Wraparound Loan

Question 13

What is the process whereby the property’s legal title is transferred to the lender?

Answer 13

Deed in lieu of foreclosure

Question 14

A blanket mortgage

Answer 14

covers more than one piece of property.

Question 15

Steve has an existing loan with Sunray Bank and has applied for a second loan. He does not have to pay off his existing mortgage in order to qualify. What type of loan is Steve getting?

Answer 15

Wraparound Loan

Question 16

The index plus the margin establishes the

Answer 16

Calculated rate.

Question 17

Which repayment plan is known as an interest-only loan?

Answer 17

Straight

Question 18

What is added to the current index to set the interest rate?

Answer 18

Margin

Question 19

In which type of loan is the payment allocated only to interest?

Answer 19

Term mortgage

Question 20

A subdivision developer most likely would apply for what type of loan?

Answer 20

Blanket Loan

Question 21

Most conventional loans follow the underwriting standards outlined by

Answer 21

Freddie Mac and Fannie Mae.

Question 22

Mark gets a home loan and the lender will charge him 3 points at closing. If the loan is for $68,000, what will Mark be assessed in points?

Answer 22

$2,040

Question 23

What do we call the right to reclaim a property that has been foreclosed by paying off amounts owed to creditors, including interest and costs?

Answer 23

Right of Redemption