Mock Exam Review Questions and Answers Graded A

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Mock Exam Review Questions and Answers Graded A (T or F): If a borrower tells you about a liability that is not listed on the credit report, it doesn't need to be included on the loan application. ... ✔✔False What is the maximum seller contribution allowed for a primary residence below 75% LTV? (FNMA/FHLMC) ✔✔9% (T or F) DU does not consider non-occupant income as qualifying income ✔✔True (T or F) HOA dues are included in the PITI calculation. ✔✔False Using the following information, answer the following conventional financed MI loan question. Sales Price = $185,000 Down Payment = 10% Credit Score = 635 20-year Fixed Owner-occupied What is the Total Loan Amount and MI Factor? ✔✔$169,247/1.65% How many days must a borrower wait to close once they receive their initial disclosures? ✔✔7 (T or F) The maximum LTV for an FHA cash-out refinance is 80%. ✔✔True Based on the following scenario, does the borrower qualify within the FHLMC guidelines? PITI: $1,375 monthly Income: $4,950 monthly Debt: $350 car payment, $420 student loan ($4,500 balance), $75 credit card payments ($850 balance). ✔✔No (T or F) A sole proprietor's net profit or loss can be located on Schedule C of their personal tax return ✔✔True (T or F) When using automated underwriting for a FNMA loan, DU will determine the borrower's reverse requirement for an investment property. ✔✔True (T or F) The ATR and QM rules state that lenders must make a reasonable, good-faith determination of a borrower's ability to repay before consummation of the mortgage loan ✔✔True The maximum allowable ratios for an owner-occupant when using a non-occupant co-borrower per FHLMC guidelines is _______. ✔✔35/43 (T or F) A borrower paid semi-monthly and a borrower paid bi-weekly have the same number of pay periods per year. ✔✔False (T or F) A borrower must qualify at the note rate on a temporary buydown, not the start rate. ✔✔True (T or F) If your borrower is being relocated and needs to close in 30-days, and their spouse will not be moving for 3 months, the spouse's income can still be used to qualify. ✔✔False Your borrower receives quarterly bonuses and wants to pay down their mortgage. Their current balance is $289,900 and their interest rate is 6.625% on an interest-only loan. What is their new monthly payment if they pay $30,000 towards the principal balance? ✔✔$1,434.87 (T or F) Loan Product Advisor (LPA) is one of the most widely used automated underwriting systems in the mortgage industry. ✔✔True (T or F) A lender must notify an applicant of action taken within 30 days after receiving a completed application concerning the lender's approval of, counteroffer to, or adverse action on the application. ✔✔True Using the information provided, answer the following FHA question: Sales Price = $245,600 Interest Rate = 4.25% 30-year Fixed Taxes = 1.5% Homeowners Insurance = .3% What is the PITI? ✔✔??? (T or F) A 3-Year ARM adjusts every 3 years. ✔✔True (T or F) HOA dues should be added to the PITI for the purpose of calculation ratios when qualifying a borrower. ✔✔True (T or F) A Loan Officer can locate the summary of eligibility requirements for a loan to be sold to a specific lender/investor in the lender specs. ✔✔False What is the qualifying rate for a 5/1 ARM with a note rate of 3.75% and 2/6 caps? The fully-indexed rate is 6.00%. ✔✔??? Three different categories of non-US Citizens that may apply for a mortgage loan and may or may not qualify are: ✔✔Resident Aliens Non-Resident Aliens Foreign Nationals Which of the following loan options would be best for a borrower looking to stay in the home for 3 years? ✔✔??? (T or F) On a FHA 203(k) Limited purchase, a borrower is allowed to finance up to $35,000 for repairs/renovations. ✔✔True (T or F) Tenancy in Common is not an acceptable manner in which title may be held. ✔✔False What is the qualifying rate for a 7/1 ARM with a note rate of 6.00% and 2/6 caps? The fully-indexed rate is 5.98%. ✔✔6.00% (T or F) A HUD Consultant would not be required for an FHA 203(k) Standard program. ✔✔False (T or F) A liability not listed on the credit report will typically need to be included on the loan application. ✔✔True It is ultimately the _______ responsibility to take a thorough loan application, to make sure all required documents are requested, and to effectively relay the decision to the borrowers. ✔✔Loan Officer's Which agency allows a borrower to qualify at the start rate for qualifying on a fixed rate with Buydown? - FNMA - FHA - FHLMC - None of the above ✔✔None of the above (T or F) The age of the youngest borrower is considered when determining the principal limit (max loan amount) for a reverse mortgage. ✔✔True Redisclosure of the Truth in Lending is required if the APR changes more than ____% on a fixed rate loan? ✔✔.125 (T or F) Loans with an LTV > 80% will typically require mortgage insurance. (FNMA/FHLMC) ✔✔True Ms. Armstrong is paid an hourly wage of $17.50. She receives time and a half for overtime (more than 40 hours per week) and has been averaging 50 hours every week, since starting with the company five years ago. Her current paystub from 7/15 of this year shows a YTD gross income of $26,260. Her W2 from last year shows $48,048 and the year before shows $46,116. What is the monthly base income and monthly overtime income that would be entered on the 1003? (Overtime not guaranteed) ✔✔$3,033/$915 Based on a loan amount of $225,000, how many years will it take your customer to break-even if they choose to pay 1.5% in discount points to secure an interest rate of 6.00% as opposed to zero points for a 6.25% rate? ✔✔7.73 years (T or F) The maximum LTV for a 1-unit investment property is 95% (FHLMC) ✔✔False (T or F) Unless a borrower can document extenuating circumstances, they must wait at least 7 years from a Chapter 7 bankruptcy or foreclosure to apply for conventional financing. ✔✔False (T or F) A borrower who has made an offer on a property and has provided their pay stubs, bank statements and W2s would be issued a Commitment Letter. ✔✔True (T or F) Unreimbursed business expenses can be located on Form 2106 of a borrower's personal tax return. ✔✔True (T or F) A borrower must qualify at the note rate on a temporary buydown, not the start rate. ✔✔True How long does a consumer have to shop for a mortgage without the credit inquiries affecting their score? ✔✔30 days Using the information provided, answer the following question: Sales Price = $166,000 Interest Rate on a 30-year fixed 1st mortgage = 6.50% Interest Rate on HELOC 2nd mortgage = 8.50% Down Payment = 10% Second Mortgage = 10% Taxes = $250 monthly Homeowners Insurance = $65 monthly What is the PITI? (include the equity line payment) ✔✔??? (T or F) A borrower can use a credit card to pay for their required down payment ✔✔False Which of the following is the correct list of charges included when calculation the borrower's cash-to-close? - Down Payment, Closing Costs, Prepaids, Discount Points, MI paid in cash (UFMIP/FF) - Down Payment, Closing Costs, Prepaids, Financed MI (UFMIP/FF) - Closing Costs, Prepaids, Discount Points, Financed MI (UFMIP/FF) ✔✔Down Payment, Closing Costs, Prepaids, Discount Points, MI paid in cash (UFMIP/FF) Your borrowers are purchasing a home for $525,000. They are requesting a $393,750 first mortgage and a $78,750 HELOC. What will their LTV, second mortgage LTV and down payment be if structured this way? ✔✔??? (T or F) A fixed-rate second mortgage has the loan amount fully disbursed at closing. Monthly payments are amortized over the term of the loan. Once the balance is paid off the mortgage is closed. ✔✔True (T or F) A simultaneous second mortgage is obtained at the same time as a first mortgage. ✔✔True (T or F) There is no minimum credit score needed to run/submit both HomeOne and Home Possible through an automated underwriting system. ✔✔True (T or F) FHA Case Numbers are tied to the property, not the borrower. ✔✔True A Loan Officer would perform all of the following functions EXCEPT: ✔✔Approve the loan (T or F) A veteran may exchange a portion of their entitlement for cash. ✔✔False What is the largest house payment that Mr. Coulter can have with his current income of $75,000 per year considering he just bought a car with a payment of $525 per month? (FNMA) ✔✔$1,740.00 (T or F) A program description contains the summary of eligibility requirements for a loan to be sold to a specific lender/investor. ✔✔True (T or F) A straw buyer is an individual who is paid to purchase a property and apply for a mortgage for someone who is unable to qualify for a loan. ✔✔True What is the maximum seller contribution allowed for an investment property at 80% LTV? (FNMA/FHLMC) ✔✔2% (T or F) Depreciation should be added to a borrower's income who owns several investment properties. ✔✔True Your borrower is paid $1,950 bi-weekly and has been on his job for three years. His wife works part-time and makes $10.25/hour. She works 20 hours per week and has been on her job for two years. What is their combined monthly income? ✔✔$5,113 Using the information provided, answer the following FHA question: Sales Price = $137,300 Interest Rate = 6.875% 30-year Fixed Taxes = 1.5% Homeowners Insurance = .3% What is the PITI? ✔✔??? (T or F) A borrower's income is a factor considered when determining the principal limit (max loan amount) for a reverse mortgage. ✔✔False (T or F) If the VA maximum entitlement has been changed by law, a veteran's COE may show an available amount which is less than the VA maximum allowable entitlement. ✔✔True (T or F) A partner's percentage of ownership and earnings can be located on Schedule E part II of their personal tax returns. ✔✔False MISSED ✔✔MISSED (T or F) FHLMC qualifying ratios are 28/36 ✔✔True Your borrower is being relocated and needs to close on the purchase of their new home in thirty days. Their spouse will not be moving for another six months. How much income can be used for qualifying if the relocating borrower is earning $92,000 annually and the trailing spouse is earning $36,000 annually? (FNMA) ✔✔??? Your borrowers are purchasing a home for $475,000. They are requesting a $380,000 first mortgage and a $71,250 HELOC. What will their LTV, second mortgage LTV, and down payment be if structured this way? ✔✔80/15/5 ??? Choose the factor below that can be used to offset severely derogatory credit: - 20% down payment - 20 years on the same job - 3 months reserves - None of the above ✔✔None of the above (T or F) Judgements and tax liens are required to be paid off at or prior to loan closing. (FNMA/FHLMC) ✔✔True After the borrower submits a complete loan application, the LE must be delivered or placed in the mail within how many days? ✔✔3 business days [Show More]

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