CRU Residential Mortgage Products & Guidelines 2

Question 1

A borrower wants a loan that allows interest-only payments for the first 10 years, then amortizes fully over the remaining 20 years. This structure is best described as a:

Accepted Answer

Interest-only fixed-rate mortgage

Answer

An interest-only fixed-rate mortgage features an initial interest-only period followed by fully amortizing principal-and-interest payments for the remaining term.

Question 2

Under Fannie Mae guidelines, what is the maximum allowable seller concession for a conventional loan with an LTV between 75.01% and 90%?

Accepted Answer

6%

Answer

Fannie Mae limits seller concessions to 6% of the sales price for conventional loans with LTVs between 75.01% and 90%.

Question 3

Which loan type requires the borrower to pay both an upfront mortgage insurance premium (UFMIP) and annual mortgage insurance premiums regardless of LTV?

Accepted Answer

FHA loan

Answer

FHA loans require UFMIP at closing plus ongoing annual MIP for the life of the loan (for most loan terms and LTVs).

Question 4

A 5/1 ARM has a 2/2/5 cap structure. If the initial rate is 4.5%, the maximum rate at the first adjustment is:

Accepted Answer

6.5%

Answer

The periodic cap of 2% limits the first adjustment to a maximum increase of 2%, so 4.5% + 2% = 6.5%.

Question 5

A HomeReady loan allows non-borrower household income to be used in which of the following ways?

Accepted Answer

Used as a compensating factor only

Answer

Under HomeReady, non-borrower household income may be considered as a compensating factor to allow a DTI above 45%, but it cannot be added to qualifying income.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Residential Mortgage Products & Guidelines 2