NMLS Mortgage Finance and Calculations 2

Question 1

A borrower has a gross monthly income of $6,000 and a proposed PITI payment of $1,500. What is the front-end DTI ratio?

Accepted Answer

25%

Answer

Front-end DTI = $1,500 / $6,000 = 25%.

Question 2

Which loan component is included in PITI but NOT in the principal and interest payment?

Accepted Answer

Hazard insurance escrow

Answer

PITI stands for Principal, Interest, Taxes, and Insurance — escrow items added on top of P&I.

Question 3

A $200,000 mortgage at 6% annual interest has a first-month interest charge of how much?

Accepted Answer

$1,000

Answer

$200,000 × 0.06 / 12 = $1,000 in interest for the first month.

Question 4

What does a loan's Annual Percentage Rate (APR) represent compared to the note rate?

Accepted Answer

The cost of credit expressed as a yearly rate including fees

Answer

APR includes the interest rate plus fees and costs, providing a broader measure of borrowing cost.

Question 5

On a $300,000 loan with 2 discount points, how much does the borrower pay upfront for the points?

Accepted Answer

$6,000

Answer

Each point equals 1% of the loan amount; 2 points × $300,000 = $6,000.

(NMLS) National Mortgage Licensing System Practice Test