Arkansas Real Estate License FREE Arkansas Real Estate License Financing and Settlement Practices Questions and Answers 2

Question 1

Under Arkansas law, what document provides the borrower with a detailed breakdown of all closing costs and fees?

Accepted Answer

Closing Disclosure

Answer

Good Faith Estimate

Answer

Title Abstract

Answer

Deed of Trust

Question 2

Which type of mortgage clause allows a lender to demand full repayment if the property is sold or transferred?

Accepted Answer

Due-on-sale clause

Answer

Prepayment penalty clause

Answer

Subordination clause

Answer

Defeasance clause

Question 3

In Arkansas, what is the primary purpose of a title search during the settlement process?

Accepted Answer

To verify there are no outstanding liens or encumbrances on the property

Answer

To determine the property's market value

Answer

To confirm the buyer's creditworthiness

Answer

To calculate property tax assessments

Question 4

What does the loan-to-value (LTV) ratio measure in a real estate financing transaction?

Accepted Answer

The loan amount as a percentage of the property's appraised value

Answer

The borrower's monthly debt compared to income

Answer

The interest rate relative to the prime rate

Answer

The down payment as a percentage of the purchase price

Question 5

Which settlement expense in Arkansas is typically prorated between buyer and seller at closing?

Accepted Answer

Property taxes

Answer

Loan origination fees

Answer

Title insurance premiums

Answer

Recording fees

Question 6

What type of financing involves the seller acting as the lender and the buyer making payments directly to the seller?

Accepted Answer

Seller financing

Answer

Conventional financing

Answer

FHA financing

Answer

Bridge loan