CMC Real Estate Finance 2

Question 1

A borrower has a gross monthly income of $8,000 and total monthly debt payments of $2,400. What is their debt-to-income ratio?

Accepted Answer

30%

Answer

20%

Answer

25%

Answer

35%

Question 2

Which type of mortgage allows the borrower to pay only interest for an initial period before principal and interest payments begin?

Accepted Answer

Interest-only mortgage

Answer

Balloon mortgage

Answer

Graduated payment mortgage

Answer

Reverse mortgage

Question 3

What is the primary purpose of a title search in a real estate transaction?

Accepted Answer

To verify the seller has clear ownership and no liens

Answer

To determine the property's market value

Answer

To inspect the physical condition of the property

Answer

To assess the neighborhood's flood risk

Question 4

Under RESPA, within how many business days must a lender provide a Loan Estimate to a mortgage applicant?

Accepted Answer

3 business days

Answer

1 business day

Answer

5 business days

Answer

7 business days

Question 5

What does the term 'seasoning' refer to in the context of mortgage lending?

Accepted Answer

The length of time assets or credit history have been established

Answer

The interest rate adjustment period on an ARM

Answer

The process of converting rental income to qualifying income

Answer

The period between rate lock and loan closing

Question 6

A property is purchased for $300,000 with a 10% down payment. What is the loan-to-value ratio at origination?

Accepted Answer

90%

Answer

10%

Answer

80%

Answer

95%

Question 7

Which federal law requires lenders to disclose the Annual Percentage Rate (APR) to borrowers?

Accepted Answer

TILA

Answer

RESPA

Answer

ECOA

Answer

HMDA