NMLS Practice Test Hard Questions with Complete Solutions

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NMLS Practice Test Hard Questions with Complete Solutions A discount point is BEST described as a charge the borrower pays to: A.) A lender to decrease the interest rate on the mortgage loan B.) A mortgage broker at the time of application to obtain a favorable rate C.) The seller as part of the closing costs of a loan D.) A lender to ensure against foreclosure ✔✔A.) A lender to decrease the interest rate on the mortgage loan A buyer has made an earnest money payment of $5,000. The buyer pays an additional $2,000 in option money to be credited at closing on property with sale price of $160,000. If the required down payment is 20%, how much additional money will the buyer need to provide toward the down payment at closing? A.) $32,000 B.) $27,000 C.) $30,000 D.) $25,000 ✔✔D.) $25,000 $160,000 x .20 (20%) = 32000 - $7,000 = $25,000 If an applicant works 40 hours every week and is paid $13.52 per hour, what is the applicant's monthly income? A.) $2,163.20 B.) $2,343.47C.) $2,379.52 D.) $2,487.68 ✔✔B.) $2,343.47 $13.52x 40 hours = $540.8 x 52 weeks = $28,121.6 annually /12month = $2,343.47 Monthly income The requirement for private mortgage insurance is generally is continued when the loan-to-value ratio falls below: A.) 20% B.) 50% C.) 80% D.) 90% ✔✔C.) 80% Which of the following documents itemizes all settlement costs including lender charges? A.) Agreement of sale B.) HUD-1/closing Disclosure C.) Form 1003 D.) Forbearance agreement ✔✔B.) HUD-1/closing Disclosure According to the Truth-in-Lending Act (TILA), the term "refinance" applies to A.) A change in a payment schedule B.) A reduction in annual percentage rate C.) The renewal of a single payment obligation with no change in the original terms D.) The satisfaction of an existing obligation and its replacement by a new obligation ✔✔D.) The satisfaction of an existing obligation and its replacement by a new obligationWhat does a loan originator use to determine the estimated value of a property based on an analytical comparison of similar property sales? A.) An appraisal B.) A market survey C.) An area survey D.) A Cost-benefit analysis ✔✔A.) An appraisal Which of the following methods of disclosure does NOT meet the requirements of Equal Credit Opportunity Act (ECOA)? A.) E-mail B.) Mailed letter C.) Telephone D.) Faxed letter ✔✔C.) Telephone Term "20 basis points" expressed as a percentage is: A.) 0.2% B.) 0.20% C.) 2.00% D.) 20.00% ✔✔B.) 0.20% one hundredth of one percent, used chiefly in expressing differences of interest rates. 0.01 so 0.01 x20 = 0.2 According to the Truth-in-Lending Act (TILA), which if the following fees is EXCLUDED from the calculation of the annual percentage rate? A.) Hazard insuranceB.) Wire transfer C.) Prepaid interest D.) Mortgage insurance premiums ✔✔A.) Hazard insurance FHA loans are: A.) Partially guaranteed B.) 100% insured C.) Exempt D.) Entitled ✔✔A.) Partially guaranteed The late fee for a conventional loan is: A.) 3% of principle and interest B.) 4% of principle and interest C.) 5% of principle and interest D.) 10% of principle and interest ✔✔C.) 5% of principle and interest A funding fee if required for a: A.) FHA loan B.) VA loan C.) Jumbo loan D.) Conventional loan ✔✔B.) VA loan A Mortgage Insurance Premium is required on: A.) FHA loan B.) VA loan C.) Jumbo loanD.) Conventional loan ✔✔A.) FHA loan The mortgagee is the: A.) Borrower B.) Lender C.) Closing agent D.) Mortgage broker ✔✔B.) Lender

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