General Test Questions and Answers

Question 1

Uniform Residential Loan Application (Form 1003): This is a standard form that is used to gather information about the borrower’s income, assets, liabilities, and creditworthiness.

Answer 1

true

Question 2

Loan Estimate (LE): This form is used to provide the borrower with an estimate of the

1) costs associated with the mortgage loan, including the
2) ______________
3) _______________
4) And other fees.

Answer 2

2) interest rate
3) closing costs

Question 3

Closing Disclosure (CD): This form is provided to the borrower before closing and includes the final terms and costs associated with the loan.? T/F

Answer 3

T

Question 4

Texas Disclosure Forms: Texas has specific disclosure requirements that must be provided to borrowers, including the:

Texas Home Equity Disclosure,
The Texas Disclosure of Interest, and the
Texas Disclosure of Seller’s Disclosure of Property Condition

Answer 4

True

Question 5

Debt-to-Income Ratio (DTI): This is calculated by dividing the borrower’s total monthly debt payments by their ____________________ income. The DTI is used to determine if the borrower has enough income to cover their debt obligations

Answer 5

gross monthly

DTI = Total Monthly Debt Payments / Gross Monthly Income

For example, if the borrower has total monthly debt payments of $2,000 and a gross monthly income of $6,000, their DTI would be:

DTI = $2,000 / $6,000 = 0.33 or 33%

Question 6

Loan-to-Value Ratio (LTV): This is calculated by dividing the loan amount by the _______________ value of the property. The LTV is used to determine the risk of the loan.

Answer 6

appraised

LTV = Loan Amount / Appraised Value of Property

For example, if the loan amount is $200,000 and the appraised value of the property is $250,000, the LTV would be:

LTV = $200,000 / $250,000 = 0.8 or 80%

Question 7

1. What is a deed of trust?

A deed of trust is a legal document used in some states instead of a __________ to secure a mortgage loan.

Answer 7

mortgage

Question 8

1. What is a mortgage note?

Answer 8

A mortgage note is a legal document that outlines the terms of a mortgage loan, including the interest rate, repayment schedule, and other key terms.

Question 9

1. What is a subprime mortgage?

Answer 9

A subprime mortgage is a type of mortgage loan that is offered to borrowers with lower credit scores and higher risk profiles, and typically comes with higher interest rates and fees

Question 10

1. What is a lien?

Answer 10

A lien is a legal claim that one party has on another party’s property as security for a debt or obligation.

Question 11

1. What is the prime rate?

Answer 11

The prime rate is the interest rate that banks charge their most creditworthy customers for loans.

Question 12

1. What is a reverse mortgage?

A reverse mortgage is a type of mortgage loan that allows homeowners over the age of _____ to convert the equity in their home into cash payments.

Answer 12

62 years