Arkansas Real Estate License Financing and Settlement Practices 4

Question 1

Which entity sets the conforming loan limits that define whether a loan is conventional or jumbo?

Accepted Answer

Federal Housing Finance Agency (FHFA)

Answer

The FHFA sets conforming loan limits annually; loans above this limit are considered jumbo loans and cannot be purchased by Fannie Mae or Freddie Mac.

Question 2

A VA loan in Arkansas requires the veteran to pay:

Accepted Answer

A VA funding fee (unless exempt)

Answer

VA loans require no down payment and no PMI, but most borrowers pay a VA funding fee, which can be financed into the loan.

Question 3

Under TRID, how many business days before closing must the Closing Disclosure be received by the borrower?

Accepted Answer

3 business days

Answer

TRID requires the borrower to receive the Closing Disclosure at least 3 business days before consummation of the loan.

Question 4

Which of the following is an example of negative amortization?

Accepted Answer

Monthly payments that are less than the interest accrued, causing the balance to grow

Answer

Negative amortization occurs when minimum payments do not cover all accrued interest, causing the unpaid interest to be added to the principal balance.

Question 5

Which clause in a mortgage gives the lender the right to demand full repayment if the property is sold?

Accepted Answer

Due-on-sale (alienation) clause

Answer

A due-on-sale or alienation clause requires the full loan balance to be repaid when the property changes ownership.

Arkansas Real Estate License Practice Test

Arkansas Real Estate License Practice Test

Arkansas Real Estate License Financing and Settlement Practices 4