Question 1

As payments are made, the amount of interest taken from a mortgage loan payment decreases and the amount applied to the principal increases. This is because of

Accepted Answer

A)  appreciation. 
B)  variable interest rate. 
C)  amortization. 
D)  depreciation. 
A)  appreciation. 
B)  variable interest rate. 
C)  amortization. 
D)  depreciation.

Question 2

Choose the most appropriate answer for each.
-the expenses a lender incurs in processing a mortgage loan

Accepted Answer

A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP 
A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP

Question 3

Like FHA insurance, the object of private mortgage insurance (PMI)is to insure lenders against ____________________ losses.

Accepted Answer

The answer of Like FHA insurance, the object of private...

Question 4

Since the VA is guaranteeing the loan, a VA loan typically requires a large down payment.

Accepted Answer

A) True 
 B)False

Question 5

A loan that requires only interest payments until the last day of its life, at which time the full amount borrowed is due, is called a(n)____________________ loan.

Accepted Answer

The answer of A loan that requires only interest payments...

Question 6

The homeowner has made regular mortgage payments over ten years and the housing values in the neighborhood have steadily risen. The equity has

Accepted Answer

A)  stayed the same. 
B)  steadily declined. 
C)  steadily increased. 
D)  fluctuated and now is less than it was when the house was purchased. 
A)  stayed the same. 
B)  steadily declined. 
C)  steadily increased. 
D)  fluctuated and now is less than it was when the house was purchased.

Question 7

Choose the most appropriate answer for each.
-an escrow or reserve account into which the lender places the borrower's monthly tax and insurance payments

Accepted Answer

A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP 
A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP

Question 8

A mortgage in which the lender collects additional money to pay hazard insurance and property taxes on the mortgaged property is called a(n)____________________ mortgage.

Accepted Answer

The answer of A mortgage in which the lender collects...

Question 9

Choose the most appropriate answer for each.
-real estate loans that are not insured by FHA or guaranteed by the VA

Accepted Answer

A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP 
A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP

Question 10

Under section 203(b), the FHA

Accepted Answer

A)  insures lenders against loan default. 
B)  lends to the secondary market. 
C)  guarantees loans. 
D)  makes loans directly. 
A)  insures lenders against loan default. 
B)  lends to the secondary market. 
C)  guarantees loans. 
D)  makes loans directly.

Question 11

A certificate of reasonable value is issued by a HUD appraiser.

Accepted Answer

A) True 
 B)False

Question 12

A single woman applied for a FHA loan to buy a property she intends to use as a rental. Which if anything might cause her application to be denied?

Accepted Answer

A)  There is no basis for denial for the application 
B)  She is single 
C)  She is a woman 
D)  She plans to use the property as a rental 
A)  There is no basis for denial for the application 
B)  She is single 
C)  She is a woman 
D)  She plans to use the property as a rental

Question 13

Who normally pays the discount points when a conventional loan is taken out to purchase a residence?

Accepted Answer

A)  Broker 
B)  Seller 
C)  Lender 
D)  Buyer 
A)  Broker 
B)  Seller 
C)  Lender 
D)  Buyer

Question 14

Choose the most appropriate answer for each.
-balance owing on a loan

Accepted Answer

A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP 
A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP

Question 15

Usually, the borrower of a FHA loan is also responsible for the mortgage insurance premium.

Accepted Answer

A) True 
 B)False

Question 16

Using the rule of thumb, which states that each discount point raises the yield by 1/8 of 1%, two discount points raise the effective yield of a typical home loan by1/4 of 1%.

Accepted Answer

A) True 
 B)False

Question 17

Choose the most appropriate answer for each.
-a loan with a series of amortized payments followed by a balloon payment at maturity

Accepted Answer

A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP 
A) Amortized loan 
B) Amortization tables 
C) Balloon loan 
D) Budget mortgage 
E) Conventional loan
F)Discount point
G)Equity
H)FHA
I)Impound account
J)Loan balance table
K)Loan origination fee
L)Loan-to-value ratio
M)Maturity
N)Partially amortized loan
O)PITI payment
P)PMI
Q)Point
R)Principal
S)Term loan
T)UFMIP

Question 18

On a $64,000 home, which of the following would require the largest cash down payment?

Accepted Answer

A)  FHA-insured loan 
B)  80% loan-to-value conventional loan 
C)  90% loan-to-value conventional 
D)  100% DVA loan 
A)  FHA-insured loan 
B)  80% loan-to-value conventional loan 
C)  90% loan-to-value conventional 
D)  100% DVA loan

Question 19

To determine benefits, a veteran should make application to the Department of Veteran Affairs for a certificate of ____________________.

Accepted Answer

The answer of To determine benefits, a veteran should make...

Question 20

Using the rule of thumb used by lenders (each point charged raises the yield by 1/8 of 1%), 4 discount points raise the effective yield of a typical home loan by

Accepted Answer

A)  1/32 of 1%. 
B)  2/8 of 1%. 
C)  1/4of 1%. 
D)  1/2 of 1%. 
A)  1/32 of 1%. 
B)  2/8 of 1%. 
C)  1/4of 1%. 
D)  1/2 of 1%.

Exam 10: Lending Practices

As payments are made, the amount of interest taken from a mortgage loan payment decreases and the amount applied to the principal increases. This is because of

Choose the most appropriate answer for each. -the expenses a lender incurs in processing a mortgage loan

Like FHA insurance, the object of private mortgage insurance (PMI)is to insure lenders against ____________________ losses.

Since the VA is guaranteeing the loan, a VA loan typically requires a large down payment.

A loan that requires only interest payments until the last day of its life, at which time the full amount borrowed is due, is called a(n)____________________ loan.

The homeowner has made regular mortgage payments over ten years and the housing values in the neighborhood have steadily risen. The equity has

Choose the most appropriate answer for each. -an escrow or reserve account into which the lender places the borrower's monthly tax and insurance payments

A mortgage in which the lender collects additional money to pay hazard insurance and property taxes on the mortgaged property is called a(n)____________________ mortgage.

Choose the most appropriate answer for each. -real estate loans that are not insured by FHA or guaranteed by the VA

Under section 203(b), the FHA

A certificate of reasonable value is issued by a HUD appraiser.

A single woman applied for a FHA loan to buy a property she intends to use as a rental. Which if anything might cause her application to be denied?

Who normally pays the discount points when a conventional loan is taken out to purchase a residence?

Choose the most appropriate answer for each. -balance owing on a loan

Usually, the borrower of a FHA loan is also responsible for the mortgage insurance premium.

Using the rule of thumb, which states that each discount point raises the yield by 1/8 of 1%, two discount points raise the effective yield of a typical home loan by1/4 of 1%.

Choose the most appropriate answer for each. -a loan with a series of amortized payments followed by a balloon payment at maturity

On a $64,000 home, which of the following would require the largest cash down payment?

To determine benefits, a veteran should make application to the Department of Veteran Affairs for a certificate of ____________________.

Using the rule of thumb used by lenders (each point charged raises the yield by 1/8 of 1%), 4 discount points raise the effective yield of a typical home loan by

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