Arkansas Real Estate License Financing and Settlement Practices 5

Question 1

In Arkansas, which instrument is most commonly used to secure a mortgage loan — a mortgage or a deed of trust?

Accepted Answer

Deed of trust, because it allows non-judicial foreclosure

Answer

Arkansas commonly uses the deed of trust because it allows a streamlined non-judicial (trustee's sale) foreclosure process.

Question 2

A USDA Rural Development loan is designed for buyers purchasing in:

Accepted Answer

Rural and certain suburban areas meeting USDA eligibility criteria

Answer

USDA loans are available for properties in rural and qualifying suburban areas as defined by USDA eligibility maps.

Question 3

Prorations at closing adjust which items between buyer and seller?

Accepted Answer

Prepaid expenses and accrued expenses such as taxes and HOA dues

Answer

Prorations divide ongoing expenses like property taxes and HOA dues between buyer and seller based on the closing date.

Question 4

Which disclosure is required by the Truth in Lending Act (TILA) and must be provided before loan consummation?

Accepted Answer

TILA Disclosure (Reg Z disclosures)

Answer

TILA/Regulation Z requires disclosures of the APR, finance charge, total payments, and payment schedule before consummation.

Question 5

A borrower has a debt-to-income ratio (DTI) of 50%. Most conventional loan guidelines require a back-end DTI of no more than:

Accepted Answer

43–45%

Answer

Most conventional loan programs through Fannie Mae/Freddie Mac cap the back-end DTI at 43–45%, though some DU approvals may allow higher.

Arkansas Real Estate License Practice Test