Mortgage Mortgage Mortgage Products and Programs Questions and Answers 2 — Questions and Answers
Question 1: Which mortgage product allows a borrower to finance both the purchase price and renovation costs in a single loan?
- FHA 203(k) loan (Correct answer)
- VA loan
- USDA loan
- Jumbo loan
Correct answer: FHA 203(k) loan
The FHA 203(k) loan combines purchase and rehabilitation financing into one mortgage.
Question 2: What is the primary advantage of a USDA Rural Development loan for eligible borrowers?
- No down payment required (Correct answer)
- No credit check required
- No closing costs
- No income verification
Correct answer: No down payment required
USDA loans offer 100% financing with no down payment for properties in eligible rural areas.
Question 3: Which type of mortgage has an interest rate that remains the same for an initial period and then adjusts periodically?
- Hybrid ARM (Correct answer)
- Fixed-rate mortgage
- Interest-only mortgage
- Balloon mortgage
Correct answer: Hybrid ARM
A hybrid ARM, such as a 5/1 ARM, has a fixed rate for the first five years before adjusting annually.
Question 4: What distinguishes a conforming loan from a non-conforming loan?
- It meets Fannie Mae and Freddie Mac guidelines (Correct answer)
- It is backed by the FHA
- It requires no private mortgage insurance
- It has a variable interest rate
Correct answer: It meets Fannie Mae and Freddie Mac guidelines
Conforming loans meet the loan limits and underwriting standards set by Fannie Mae and Freddie Mac.
Question 5: A borrower seeking a mortgage for a property valued at $1.2 million in most U.S. counties would likely need which type of loan?
- Jumbo loan (Correct answer)
- Conventional conforming loan
- FHA loan
- USDA loan
Correct answer: Jumbo loan
A jumbo loan exceeds the conforming loan limits set by the FHFA, which is necessary for high-value properties.
Question 6: Which mortgage program is exclusively available to eligible military service members, veterans, and surviving spouses?
- VA loan (Correct answer)
- FHA loan
- HomeReady mortgage
- Home Possible mortgage
Correct answer: VA loan
VA loans are guaranteed by the Department of Veterans Affairs and restricted to qualifying military-affiliated borrowers.
Mortgage Mortgage Mortgage Products and Programs Questions and Answers 2
Which mortgage product allows a borrower to finance both the purchase price and renovation costs in a single loan?