Loans Mortgage Loan 4

Question 1

What is a 'jumbo loan'?

Accepted Answer

A loan that exceeds the conforming loan limits set by the FHFA

Answer

A jumbo loan exceeds the conforming loan limits established by the Federal Housing Finance Agency (FHFA) and cannot be purchased by Fannie Mae or Freddie Mac.

Question 2

What is 'mortgage points,' and how do they work?

Accepted Answer

Upfront fees paid to the lender to reduce the interest rate

Answer

Each mortgage point equals 1% of the loan amount and is paid at closing to buy down (lower) the interest rate.

Question 3

A VA home loan benefit is exclusively available to which group?

Accepted Answer

Eligible veterans, active-duty service members, and surviving spouses

Answer

VA loans are a benefit administered by the U.S. Department of Veterans Affairs for eligible veterans, active-duty military, and qualifying surviving spouses.

Question 4

What is a 'home equity line of credit' (HELOC)?

Accepted Answer

A revolving line of credit secured by the borrower's home equity

Answer

A HELOC is a revolving credit line secured by home equity, allowing borrowers to draw and repay funds as needed up to the credit limit.

Question 5

Which document provides a standardized, three-page summary of key loan terms that lenders must give borrowers at least three business days before closing?

Accepted Answer

Closing Disclosure

Answer

The Closing Disclosure must be delivered at least three business days before closing and details all final loan terms, costs, and cash-to-close.

Loans Practice Test

Loans Practice Test

Loans Mortgage Loan 4