PRINCIPLES AND PRACTICES CHP 15 Flashcards
A buyer is applying for a loan to purchase their first house. When evaluating the loan’s risk, the lender will be most concerned with
A. the buyer’s income and financial stability.
B. the loan’s interest rate.
C. the property’s appraised value.
D. the sales price of other homes in the area.
D. the sales price of other homes in the area.
What is the best thing a licensee can do to help ensure that a buyer will be able to obtain the financing necessary to close a transaction?
A. prequalify the buyer
B. refer buyers to a specific lender
C. require the buyer to be preapproved
D. show only low-priced properties
C. require the buyer to be preapproved
The purpose of requiring payment into a mortgage escrow account is to
A. allow the borrower to obtain actual cash from the equity built up in the property.
B. allow the lender to participate in any earnings, income, or profits generated.
C. ensure that enough funds are collected to cover taxes and insurance premiums.
D. include the financing of personal property, such as appliances or furnishings.
C. ensure that enough funds are collected to cover taxes and insurance premiums.
A buyer purchases a house for $300,000, making a $60,000 down payment and paying three discount points to bring down the interest rate. What is the total cost of the discount points?
A. $3,000
B. $6,000
C. $7,200
D. $9,000
C. $7,200
A lender must deliver the Loan Estimate to a borrower within application. of submitting a completed loan
A. 2 business days
B. 3 business days
C. 5 business days
D. 7 business days
B. 3 business days
Which property would NOT be subject to the disclosure requirements of RESPA?
A. a condominium unit in a high-rise building
B. a farmhouse on a 10-acre lot
C. a four-unit apartment building
D. a single-family home bought with cash
D. a single-family home bought with cash
The primary purpose of the Truth in Lending Act (Reg Z) is to disclose
A. any adverse action when rendering a credit decision.
B. the aggregate interest charge for similar properties.
C. the complete cost of credit.
D. a good faith estimate of closing costs.
C. the complete cost of credit.
A buyer is getting a loan to purchase 100 acres of timber with no residence. According to the Truth in Lending Act, lenders
A. must disclose all settlement charges.
B. must disclose the annual percentage rate.
C. must give the borrower a three-day rescission period.
D. are not required to make any disclosures.
D. are not required to make any disclosures.
What is the soonest a mortgage loan could theoretically close?
A. 3 business days after the application is submitted
B. 3 business days after the required disclosures are delivered
C. 7 business days after the required disclosures are delivered
D. 10 days from when the applicant states an intention to proceed with the loan
C. 7 business days after the required disclosures are delivered
When evaluating a loan applicant’s credit obligations, a lender would LEAST LIKELY consider which of the following to be debt?
A. cable television premium channel fees
B. car loan payment with 15 payments left
C. child support payments
D. credit card debt payments
A. cable television premium channel fees
A borrower’s stable monthly income is $3,000. They haves three monthly debts: $350 car payment, $50 personal loan payment, and $50 credit card payment. What is the maximum monthly mortgage payment they would qualify for on a conventional loan?
A. $390
B. $630
C. $840
D. $1,080
B. $630
As a lender’s underwriters evaluate a borrower’s loan application to decide whether to make the loan, they may NOT consider the borrower’s
A. employment history.
B. field of employment and its economic viability.
C. history of making payments on past obligations.
D. receipt of public assistance.
D. receipt of public assistance.
The asking price of a house is $235,000. A prospective buyer offers $230,000, and the house appraises for $225,000. If the lender is willing to make an 80% LTV loan, what is the required down payment if the offer is accepted?
A. $45,000
B. $46,000
C. $47,000
D. $50,000
D. $50,000
A borrower refinances their home through a new lender. What are their rights of rescission under the Truth in Lending Act?
A. three business days after signing the loan application
B. seven days after signing the loan application
C. three business days after receiving the funds
D. They have no right to rescind the loan.
A. three business days after signing the loan application
From a borrower’s perspective, what is an advantage of private mortgage insurance?
A. It allows the borrower to make a smaller down payment.
B. It protects the borrower against default.
C. It protects the borrower’s title against other claims.
D. It reimburses the borrower for damage to the property.
A. It allows the borrower to make a smaller down payment.
