PSI Real Estate Financing MCQ 4

Question 1

What is a 'conforming loan' in the context of conventional mortgage financing?

Accepted Answer

A loan that meets Fannie Mae or Freddie Mac's purchase criteria including loan limits

Answer

A conforming loan meets the underwriting standards and loan limits set by Fannie Mae and Freddie Mac, making it eligible for purchase on the secondary market.

Question 2

Which of the following BEST describes a 'bridge loan' in real estate?

Accepted Answer

A short-term loan used to bridge the gap between buying a new home and selling the existing one

Answer

A bridge loan is short-term financing that allows a borrower to purchase a new property before their current property is sold.

Question 3

A borrower has a gross monthly income of $5,000 and total monthly debt obligations of $1,900 including a proposed PITI of $1,200. What is the back-end debt-to-income ratio?

Accepted Answer

38%

Answer

The back-end DTI divides total monthly debts ($1,900) by gross monthly income ($5,000) = 38%.

Question 4

Under a VA loan, what is the purpose of the VA 'funding fee'?

Accepted Answer

It funds the VA loan guaranty program and allows veterans to obtain loans with no down payment

Answer

The VA funding fee is a one-time charge that helps sustain the VA loan program, allowing eligible veterans to obtain no-down-payment mortgages without ongoing mortgage insurance.

Question 5

Which clause in a mortgage document gives the lender the right to declare the entire loan balance immediately due and payable if the borrower defaults?

Accepted Answer

Acceleration clause

Answer

The acceleration clause allows the lender to demand immediate full repayment of the remaining loan balance upon the borrower's default or other triggering event.

PSI - Exams Practice Test

PSI - Exams Practice Test

PSI Real Estate Financing MCQ 4