FREE NMLS General Mortgage Knowledge Questions and Answers

Question 1

A prospective borrower is applying for a loan to purchase a home.
The property's appraised value is $350,000 and the purchase price is $360,000.
If the borrower makes a down payment of $72,000, what is the loan-to-value (LTV) ratio?

Accepted Answer

80%

Answer

82%

Answer

78%

Answer

82.3%

Question 2

Under the Gramm-Leach-Bliley Act (GLBA), which of the following is a primary requirement of the Safeguards Rule?

Accepted Answer

Developing and implementing a comprehensive written information security program.

Answer

Providing customers with an annual notice of the institution's privacy policies.

Answer

Allowing customers to opt-out of sharing their nonpublic personal information with nonaffiliated third parties.

Answer

Prohibiting the practice of obtaining customer information through false pretenses (pretexting).

Question 3

According to the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, an individual is required to be licensed as a mortgage loan originator if they perform which of the following activities for compensation or gain?

Accepted Answer

Taking a residential mortgage loan application and offering or negotiating terms.

Answer

Performing purely administrative or clerical tasks on behalf of a licensee.

Answer

Only negotiating the terms of a residential mortgage loan on behalf of an immediate family member.

Answer

Extending credit solely for timeshare plans.

Question 4

A veteran is using their VA loan benefit for the second time to purchase a home with no down payment. Which of the following statements is TRUE regarding the VA funding fee?

Accepted Answer

The funding fee may be financed into the loan amount.

Answer

The veteran is exempt from paying the funding fee because it is their second time using the benefit.

Answer

The funding fee will be lower than the fee for a first-time use.

Answer

The funding fee is a monthly payment similar to mortgage insurance.

Question 5

Under the ECOA Valuations Rule, a creditor must provide a copy of all appraisals and other written valuations to the applicant:

Accepted Answer

Promptly upon completion, or at least three business days prior to consummation, whichever is earlier.

Answer

Only if the loan is approved and closes.

Answer

Within three business days of receiving the appraisal, but only if the applicant requests it in writing.

Answer

At the time of loan consummation, along with the other closing documents.

Question 6

Which of the following best describes the 'back-end' debt-to-income (DTI) ratio used in conventional loan underwriting?

Accepted Answer

The ratio of the borrower's total recurring monthly debt, including the proposed housing expense (PITI), to their gross monthly income.

Answer

The ratio of the proposed monthly housing expense (PITI) to the borrower's gross monthly income.

Answer

The ratio of all recurring monthly debt, including the proposed housing expense, to the borrower's net monthly income.

Answer

The ratio of all non-housing related monthly debt to the borrower's gross monthly income.

A prospective borrower is applying for a loan to purchase a home.The property's appraised value is $350,000 and the purchase price is $360,000.If the borrower makes a down payment of $72,000, what is the loan-to-value (LTV) ratio?

A prospective borrower is applying for a loan to purchase a home.
The property's appraised value is $350,000 and the purchase price is $360,000.
If the borrower makes a down payment of $72,000, what is the loan-to-value (LTV) ratio?