SAFE General Mortgage Knowledge 2

Question 1

Which type of mortgage index is directly tied to U.S. Treasury securities?

Accepted Answer

Constant Maturity Treasury (CMT)

Answer

Prime Rate

Answer

LIBOR

Answer

SOFR

Question 2

A borrower has a 5/1 ARM. What does the '1' represent?

Accepted Answer

The rate can adjust every 1 year after the initial period

Answer

The loan adjusts after 1 month of fixed rate

Answer

The margin is 1%

Answer

The cap on each adjustment is 1%

Question 3

What is the primary purpose of an escrow account in a mortgage?

Accepted Answer

To collect monthly funds for taxes and insurance

Answer

To hold the down payment until closing

Answer

To secure the lender's collateral interest

Answer

To hold earnest money during underwriting

Question 4

Under RESPA, which of the following is considered a 'controlled business arrangement'?

Accepted Answer

A referral between affiliated companies where compensation is paid

Answer

A lender offering discounted rates to repeat customers

Answer

A rate lock agreement between borrower and lender

Answer

A joint marketing agreement between two unaffiliated lenders

Question 5

What does 'loan-to-value ratio' (LTV) measure?

Accepted Answer

Loan amount divided by the appraised property value

Answer

Monthly payment as a percentage of gross income

Answer

Total debt divided by total assets

Answer

Interest rate relative to market rates

Question 6

Which mortgage product allows the borrower to make interest-only payments for a specified period?

Accepted Answer

Interest-only mortgage

Answer

Graduated payment mortgage

Answer

Balloon mortgage

Answer

Reverse mortgage

Question 7

What is the maximum loan amount for a conforming conventional mortgage in most U.S. counties for a single-family home in 2024?

Accepted Answer

$766,550

Answer

$548,250

Answer

$647,200

Answer

$726,200