Real Estate Sales Exam Financing and Mortgages 5

Question 1

Which government-sponsored enterprise (GSE) purchases conventional conforming loans on the secondary market?

Accepted Answer

Fannie Mae

Answer

Fannie Mae (and Freddie Mac) purchase conforming conventional loans from lenders on the secondary mortgage market.

Question 2

A buyer's front-end (housing) ratio should generally not exceed what percentage of gross monthly income under conventional loan guidelines?

Accepted Answer

28%

Answer

Conventional lenders typically prefer the housing ratio (PITI ÷ gross income) to be no more than 28%.

Question 3

What is the maximum conforming loan limit used to determine whether a loan qualifies as a conventional conforming loan (standard 2024 baseline)?

Accepted Answer

$806,500

Answer

For 2024, the baseline conforming loan limit set by the FHFA is $766,550 — the closest answer here is $806,500 (2025 limit), but the concept is the FHFA sets annual limits.

Question 4

Which mortgage clause allows the lender to declare the entire loan balance due immediately if the borrower defaults?

Accepted Answer

Acceleration clause

Answer

The acceleration clause gives the lender the right to demand full repayment of the outstanding balance upon borrower default.

Question 5

A 'wraparound mortgage' is most commonly used when:

Accepted Answer

A seller finances the buyer while keeping an existing underlying mortgage in place

Answer

In a wraparound, the seller finances the buyer with a new mortgage that 'wraps around' the existing mortgage the seller continues to pay.

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Financing and Mortgages 5