Real Estate Finance & Mortgages 2

Question 1

A conventional loan is characterized by:

Accepted Answer

No government backing, conforming to Fannie Mae/Freddie Mac guidelines

Answer

Government insurance or guarantee

Answer

Fixed 30-year term only

Answer

Exclusive use by veterans

Question 2

VA home loans are exclusively available to:

Accepted Answer

Eligible veterans, active-duty service members, and qualifying surviving spouses

Answer

All US citizens

Answer

Low-income first-time buyers

Answer

Federal government employees

Question 3

Paying 'points' at loan closing means the borrower is:

Accepted Answer

Paying upfront fees to permanently reduce the mortgage interest rate

Answer

Paying realtor commissions early

Answer

Making a larger down payment

Answer

Paying property taxes in advance

Question 4

The debt-to-income (DTI) ratio most commonly used by lenders for conventional loans should not exceed:

Accepted Answer

43%

Answer

50%

Answer

30%

Answer

60%

Question 5

In a deed of trust, who holds legal title to the property during the loan term?

Accepted Answer

A neutral third-party trustee

Answer

The borrower (trustor)

Answer

The lender (beneficiary)

Answer

The title insurance company

Question 6

A balloon payment mortgage requires the borrower to:

Accepted Answer

Pay a large lump-sum balance at the end of the loan term

Answer

Make increasing payments each year

Answer

Refinance after 5 years mandatorily

Answer

Make bi-weekly payments