Arkansas Real Estate License FREE Arkansas Real Estate License Financing and Settlement Practices Questions and Answers 2

Question 1

Under Arkansas law, what document provides the borrower with a detailed breakdown of all closing costs and fees?

Accepted Answer

Closing Disclosure

Answer

The Closing Disclosure, required by TRID rules, itemizes all settlement charges for the borrower before closing.

Question 2

Which type of mortgage clause allows a lender to demand full repayment if the property is sold or transferred?

Accepted Answer

Due-on-sale clause

Answer

A due-on-sale clause permits the lender to accelerate the loan balance when ownership of the property changes.

Question 3

In Arkansas, what is the primary purpose of a title search during the settlement process?

Accepted Answer

To verify there are no outstanding liens or encumbrances on the property

Answer

A title search examines public records to ensure the seller can convey clear title free of undisclosed liens or claims.

Question 4

What does the loan-to-value (LTV) ratio measure in a real estate financing transaction?

Accepted Answer

The loan amount as a percentage of the property's appraised value

Answer

LTV is calculated by dividing the mortgage amount by the appraised value or purchase price, whichever is lower.

Question 5

Which settlement expense in Arkansas is typically prorated between buyer and seller at closing?

Accepted Answer

Property taxes

Answer

Property taxes are prorated so each party pays for the portion of the tax period during which they owned the property.

Arkansas Real Estate License Practice Test