Mortgage General Mortgage Knowledge 4

Question 1

If a borrower has a 30-year fixed mortgage at 7% interest, what remains constant throughout the loan?

Accepted Answer

The monthly payment amount and interest rate

Answer

Only the property tax portion

Answer

Only the principal balance

Answer

The escrow contribution only

Question 2

What is 'loan-to-value' (LTV) ratio?

Accepted Answer

The percentage of the property's value that the loan represents

Answer

The ratio of down payment to total loan cost

Answer

The ratio of monthly payment to home value

Answer

The proportion of the loan amount to the borrower's annual income

Question 3

Under the Real Estate Settlement Procedures Act (RESPA), what is prohibited?

Accepted Answer

Paying kickbacks or referral fees between settlement service providers

Answer

Charging an origination fee

Answer

Requiring title insurance

Answer

Collecting escrow for property taxes

Question 4

What is a 'short sale' in real estate?

Accepted Answer

Selling a home for less than the outstanding mortgage balance with lender approval

Answer

Selling a home within one year of purchase

Answer

A quick cash sale that closes in under 30 days

Answer

A sale where the buyer pays less than the listing price

Question 5

What is an 'assumption' of a mortgage?

Accepted Answer

A buyer taking over the seller's existing mortgage terms and balance

Answer

A lender's estimate of future property taxes

Answer

The lender's assumption that the borrower will default

Answer

Pre-qualifying for a loan before finding a property

Question 6

Which federal law requires lenders to disclose the Annual Percentage Rate (APR) to borrowers?

Accepted Answer

The Truth in Lending Act (TILA)

Answer

The Fair Housing Act

Answer

The Community Reinvestment Act

Answer

The Equal Credit Opportunity Act

Question 7

What is a 'prepayment penalty' on a mortgage?

Accepted Answer

A fee charged for making payments early or paying off the loan before its term ends

Answer

A penalty for missing a payment

Answer

An additional charge for refinancing with the same lender

Answer

A fee assessed when property values decline