Free Mortgage Loan Originator Assessment Questions and Answers

Question 1

Regarding a debt that has partially amortized, all of the following are true, with the exception of:

Accepted Answer

A partially amortized loan is a self-liquidating loan.

Answer

A partially amortized loan is one where the periodic payments cover interest and some principal, but are not sufficient to fully pay off the loan by the end of its term. This means it is not a self-liquidating loan, as a significant principal balance remains due at the end, requiring a final large balloon payment. Interest is paid throughout the term, but the principal is not fully retired.

Question 2

Which of the following statements about a straight-term mortgage is true?

Accepted Answer

No principal payments are being made.

Answer

A straight-term mortgage, also known as an interest-only loan, requires the borrower to make payments that cover only the interest accrued on the principal balance for the duration of the loan term. During this period, no principal payments are made, meaning the entire original principal amount remains due as a lump sum at the end of the term. This differs from a partially amortized loan, which includes some principal repayment.

Question 3

Regarding a blanket mortgage, all of the following are true, with the exception of:

Accepted Answer

A blanket mortgage usually includes a full release clause.

Answer

A blanket mortgage covers more than one parcel of land or lot, commonly used by developers to finance subdivision developments. It typically includes a partial release clause, which allows individual lots to be released from the mortgage lien as they are sold, upon payment of a specified amount. A full release clause would imply the entire mortgage is released, which is not the standard feature for individual lot sales within a blanket mortgage.

Question 4

How long does it take to pay off a bridge loan?

Accepted Answer

When the second loan is taken out.

Answer

A bridge loan is a short-term loan designed to provide temporary financing, often used to bridge the gap between selling an old home and buying a new one, or to cover costs until permanent financing is secured. It is typically paid off when the borrower secures their permanent, long-term financing for the new property, which is effectively when the subsequent or 'second' loan is taken out.

Question 5

Which of the following statements about a cash-out mortgage is accurate:

Accepted Answer

All of the above

Answer

A cash-out mortgage accurately encompasses all the provided descriptions. It can be a refinance that provides the owner with cash by taking out a new loan larger than the existing one, allowing them to tap into their accumulated home equity. Furthermore, it can be structured as either a junior (second) or senior (first) lien, depending on the borrower's needs and the property's existing encumbrances.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Free Mortgage Loan Originator Assessment Questions and Answers