Mortgage Mortgage Mortgage Products and Programs Questions and Answers 2

Question 1

Which mortgage product allows a borrower to finance both the purchase price and renovation costs in a single loan?

Accepted Answer

FHA 203(k) loan

Answer

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?

Accepted Answer

No down payment required

Answer

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?

Accepted Answer

Hybrid ARM

Answer

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?

Accepted Answer

It meets Fannie Mae and Freddie Mac guidelines

Answer

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?

Accepted Answer

Jumbo loan

Answer

A jumbo loan exceeds the conforming loan limits set by the FHFA, which is necessary for high-value properties.

Mortgage Practice Test