Practice Test Geeks(SAFE) Certified Secure and Fair Enforcement Mortgage Loan Originator Practice Test
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Financial Analysis & Loan Documentation Flashcards

7 cards from real SAFE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Analysis & Loan Documentation flashcards as text

  1. When calculating the qualifying income for a rental property, lenders typically use what percentage of the gross rental income?

    Answer: 75%

    Most conventional guidelines allow 75% of gross rental income to account for vacancy and maintenance expenses.

  2. A borrower's credit report shows a collections account with a $500 balance. Under most conventional guidelines, what must happen before closing?

    Answer: The lender must include a monthly payment in the DTI calculation or require payoff, depending on guidelines

    Collection account treatment varies by guideline; lenders may include a calculated monthly payment in DTI or require payoff depending on loan type and lender overlay.

  3. What is the maximum back-end DTI ratio typically allowed for a Qualified Mortgage (QM) under standard GSE guidelines?

    Answer: 50%

    Fannie Mae and Freddie Mac allow back-end DTI up to 50% for borrowers who meet compensating factor requirements, though 43% was the original QM threshold.

  4. What does the Annual Percentage Rate (APR) represent on mortgage disclosures?

    Answer: The true cost of credit expressed as a yearly rate, including fees and charges

    APR reflects the total cost of borrowing over a year, including the interest rate plus certain fees, expressed as an annualized percentage.

  5. A borrower has been employed at the same company for 18 months after switching careers. How should the loan originator treat this employment history?

    Answer: Analyze the prior employment and income to ensure a two-year employment history is documented

    Lenders require a two-year employment history; a career change within that period requires documenting prior employment to satisfy the full timeline.

  6. Which of the following is NOT typically considered a qualifying income source for mortgage purposes?

    Answer: Lottery winnings received as a lump sum

    Lump-sum lottery winnings are not considered stable, predictable income and therefore cannot be used for mortgage qualification.

  7. On a Closing Disclosure, which section discloses the cash required from the borrower at closing?

    Answer: Page 3 - Calculating Cash to Close

    Page 3 of the Closing Disclosure contains the 'Calculating Cash to Close' table, which summarizes the final amount due from the borrower.