SAFE - Certified Secure and Fair Enforcement Mortgage Loan Originator Mortgage Products and Calculations Questions and Answers

Question 1

A borrower is purchasing a home with a sales price of $450,000. The property is appraised for $440,000. The borrower is approved for a loan of $374,000. What is the loan-to-value (LTV) ratio?

Accepted Answer

85.0%

Answer

83.1%

Answer

87.2%

Answer

84.0%

Question 2

A borrower has an adjustable-rate mortgage (ARM) tied to the 30-day Average SOFR index. The margin on the loan is 2.50%. If the SOFR index is currently at 3.15%, what is the fully indexed rate?

Accepted Answer

5.65%

Answer

0.65%

Answer

2.50%

Answer

3.15%

Question 3

A first-time homebuyer with a credit score of 610 has saved $10,000 for a down payment on a home with a purchase price of $275,000. Which of the following loan programs is the most likely option for this borrower?

Accepted Answer

An FHA loan

Answer

A conventional loan requiring 5% down

Answer

A VA loan

Answer

A conventional loan requiring 3% down

Question 4

Which of the following charges on a Closing Disclosure is considered a prepaid item?

Accepted Answer

First year's homeowners insurance premium

Answer

Lender's title insurance premium

Answer

Loan origination fee

Answer

Appraisal fee

Question 5

A mortgage loan has a term of 7 years, but its payment schedule is calculated as if it were a 30-year loan. This results in relatively low monthly payments, but a very large single payment of the remaining principal balance is due at the end of the 7-year term. What is this type of loan called?

Accepted Answer

Balloon Mortgage

Answer

Graduated Payment Mortgage

Answer

Reverse Mortgage

Answer

Interest-Only Mortgage

Question 6

A loan applicant has a gross monthly income of $7,500. Their proposed monthly housing payment (PITI) is $2,100. What is the applicant's housing expense ratio (front-end ratio)?

Accepted Answer

28%

Answer

32%

Answer

25%

Answer

35.7%

A borrower is purchasing a home with a sales price of $450,000.The property is appraised for $440,000.The borrower is approved for a loan of $374,000.What is the loan-to-value (LTV) ratio?

A borrower is purchasing a home with a sales price of $450,000.
The property is appraised for $440,000.
The borrower is approved for a loan of $374,000.
What is the loan-to-value (LTV) ratio?