SAFE Products and Calculations 2

Question 1

A borrower has a $300,000 loan at 6% annual interest. What is the monthly interest portion of the first payment using simple interest calculation?

Accepted Answer

$1,500

Answer

$1,800

Answer

$1,200

Answer

$2,400

Question 2

An ARM has a 2/6 cap structure with an initial rate of 4.5%. What is the maximum rate the loan can ever reach?

Accepted Answer

10.5%

Answer

8.5%

Answer

6.5%

Answer

12.5%

Question 3

Which loan product is characterized by payments that cover only interest for a set period, after which the payment increases substantially?

Accepted Answer

Interest-only mortgage

Answer

Fully amortizing fixed-rate loan

Answer

Balloon mortgage

Answer

Graduated payment mortgage

Question 4

A home appraises at $250,000 and the borrower puts 10% down. What is the LTV ratio?

Accepted Answer

90%

Answer

10%

Answer

80%

Answer

110%

Question 5

What is the FHA upfront mortgage insurance premium (UFMIP) rate for most FHA purchase loans?

Accepted Answer

1.75%

Answer

0.85%

Answer

2.25%

Answer

0.55%

Question 6

A conventional loan with an 85% LTV on a $400,000 purchase would require PMI. Approximately how much is the loan amount?

Accepted Answer

$340,000

Answer

$360,000

Answer

$320,000

Answer

$380,000

Question 7

A 5/1 ARM means the interest rate is fixed for the first 5 years and then adjusts every:

Accepted Answer

1 year

Answer

5 years

Answer

6 months

Answer

3 years