XINNIX Ground School Mortgage Practice Test

These questions are part of the practice quiz. Start practicing

• Which documents are commonly used to verify a borrower's assets?
• What is the Uniform Residential Appraisal Report (URAR) used for?
• What are compensating factors and how do they influence underwriting decisions?
• In appraisal processes, who performs a field review?
• An escrow waiver is a request to waive the escrow account for taxes and insurance; lenders may approve for which conditions?
• What are the two components that determine the fully indexed rate on an ARM?
• Escrow funds at closing are typically used to cover which ongoing payments?
• Redisclosure of the Truth in Lending is required if the PAR changes more than what percentage on a fixed-rate loan?
• Which parties are protected by title insurance against title defects and undiscovered liens?
• What is the purpose of an Automated Underwriting System (AUS) like DU or LP?
• How many years will it take for a customer to break even if they pay 1.5% in discount points for a lower interest rate?
• Which items typically appear on the Closing Disclosure as closing costs and prepaid items?
• What is the main purpose of the Fair Housing Act?
• Can a borrower requesting a jumbo loan qualify for an agency loan?
• What is typically required documentation when processing an FHA new construction loan?
• What are the main ATR (Ability-to-Repay) requirements for a mortgage loan?
• What is the typical maximum front-end DTI for conventional conforming loan without compensating factors?
• Under conventional loans, PMI can be canceled when what occurs?
• What is the Truth in Lending Act (TILA) and why is it important in mortgage lending?
• What is HMDA?
• In which schedule are partner earnings recorded in personal tax returns?
• What is an Appraisal Management Company (AMC) and why is it used?
• What is the difference between a rate lock and a float status on an application?
• Why is seasoning a down payment fund important for verification?
• What is the maximum loan-to-value ratio for owner-occupants with non-occupant co-borrowers according to FHLMC?
• What does PITI stand for?
• How is the monthly MI calculated for an FHA loan?
• In a mortgage transaction, who has a 3-business-day right to cancel and under what conditions?
• According to FNMA and FHLMC, how is a large deposit defined?
• Which of the following is a type of renovation mortgage?
• Are prepayment penalties common in today’s mortgage market?
• What is the maximum LTV for an FHA cash-out refinance?
• What is a conforming loan and how does it relate to the GSEs and their loan limits?
• Hazard insurance is required by lenders primarily to protect which of the following?
• Which party is known as the "end" lender in a mortgage banker's transaction?
• Negative amortization occurs when payments do not cover all accruing interest, causing the loan balance to increase. Which option best describes this concept?
• Which aspect of a loan program can significantly affect whether a borrower is eligible?
• If a borrower has a 1-year ARM with a note rate of 4.25%, what will the rate be for year 2 if the index is 4.25%?
• What is the Upfront Mortgage Insurance Premium (UFMIP) and when is it paid?
• Do churning schemes typically involve dishonest claims regarding down payment amounts or appraisals?
• Under TRID, when must the Loan Estimate (LE) be provided to the borrower?
• What must be provided when a relative gifts money for a down payment?
• Which statement best describes the effect of a QM on lenders?
• How much does Ms. Armstrong earn monthly in overtime income?
• Negative amortization occurs when payments do what relative to accruing interest?
• What is chain of title?
• What is the benefit of Schedule K-1 for borrowers?
• When can PMI be canceled on a conventional loan?
• What is Form 4506-T and when is it used?
• What protections does ECOA provide in mortgage lending?
• What is a seller concession (credit) and how does it affect the borrower's cash to close?
• What is loan-to-value (LTV) and why is it important?
• What is required from the builder to clear a FHA new construction loan?
• How often does a 3-Year ARM adjust?
• What is the required disclosure timeline under TRID for Closing Disclosure?
• Reserves are best described as: Additional liquid assets kept after closing to cover several months of payments.
• Flood insurance is required for properties located in which area designation, according to FEMA, and what does it cover?
• Which of the following about funding or guarantee fees for USDA Rural Development loans is true?
• Is it true that a borrower must have 5% of their own funds when putting 15% down on a primary residence?
• How do mortgage and deed of trust differ as security instruments?
• How does a conventional loan differ from an FHA loan regarding down payment and mortgage insurance?
• Which statement best describes the front-end debt-to-income (DTI) ratio?
• UFMIP is associated with which loan program and how is it paid?
• What is CLTV and how is it used in underwriting?
• Is a borrower considered a first-time home buyer under HomeOne if they haven't owned a home in the last three years?
• What is the purpose of the Appraiser Independence Requirements (AIR) in the appraisal process?
• What is an escrow account and what is it used for in mortgages?
• What does RESPA Section 8 prohibit?
• Under TRID, which disclosures interact with RESPA during the loan process?
• Which statement about PMI on conventional loans is true?
• Which statement about gift letters is true?
• How is the FHA mortgage insurance structure (upfront and annual) typically configured?
• What is a wrap-around mortgage?
• Does a HELOC loan typically have an interest-only payment option?
• How can a borrower’s credit score influence loan pricing and underwriting outcomes?
• What are 'reserves' in mortgage lending?
• What advertising disclosures are required under TILA-RESPA and Regulation Z?
• What are the maximum allowable ratios for an owner-occupant using a non-occupant co-borrower per FHLMC guidelines?
• According to USDA guidelines, must borrowers meet income limits?
• Which of the following best describes the extended '3 Cs' in underwriting that includes additional financial resources?
• Who sets the conforming loan limits?
• Which items are essential components of a residential real estate purchase agreement?
• What is a licensed closing agent’s role in the mortgage process?
• What is the funding fee for a veteran who has not previously used their eligibility and is purchasing a home with a 5% down payment?
• Which statement correctly differentiates conditional approval from final approval in underwriting?
• What is the purpose of escrow for taxes and homeowners insurance, and what item is included in monthly payments?
• What does cash to close include?
• What are "reserves" and how are they used in underwriting?
• When a borrower owns several investment properties, should depreciation be added to their income?
• Which loan type commonly offers the possibility of no down payment?
• At what maximum LTV ratio can a borrower typically refinance with a conventional loan?
• Which of the following is true regarding the adjustment of an ARM's interest rate?
• What is the relationship of a borrower to the lender when they can pay an origination fee?
• Which item is commonly added to the traditional three Cs (credit, capacity, collateral) in underwriting?
• What occupancy types are typically considered in mortgage underwriting?
• Which mortgage-related policy protects the lender's security interest?
• How do PMI and MIP differ and what affects their termination?
• What is the qualifying rate for a 5/1 ARM that has a note rate of 3.75% and a fully-indexed rate of 6.00%?
• What is the purpose of the SAFE Act in mortgage licensing?
• Which statement accurately describes a requirement of the SAFE Act for Mortgage Loan Originators?
• When adjusting a 1-Year ARM with 2/6 caps, how is the rate for year 2 determined?
• Which contingency is commonly included in a residential purchase agreement to protect the buyer if financing falls through?
• Are judgments and tax liens required to be paid off at or prior to loan closing?
• Is the information about falsified down payment amounts and appraisals relating to unethical practices in loan origination?
• What is the purpose of an escrow account in mortgage financing?
• What is an escrow account and what items are typically escrowed?
• Under HomeOne guidelines, what is the maximum LTV allowed for a primary residence purchase if at least one borrower has not owned a home in the last 3 years?
• What is HOEPA and which loans fall under its protections?
• When calculating ratios for qualifying a borrower, should HOA dues be included in the PITI?
• What is the maximum seller contribution allowed for an investment property at 80% LTV?
• Which loan type typically requires a Mortgage Insurance Premium (MIP)?
• Which of the following describes the basic eligibility characteristics of a USDA Rural Development loan?
• What does lien priority determine?
• How does hazard insurance differ from typical homeowner's insurance terminology, and why is it required?
• What is the largest monthly house payment Ms. Joyce can afford given her income and expenses?
• After submitting a complete loan application, how many days must the Loan Estimate be delivered or mailed?
• If a borrower is categorized as a first-time home buyer, what does it affect regarding loan eligibility?
• What is a condition under which HomeOne would allow up to a 97% LTV?
• Which area designation triggers the requirement for flood insurance?
• Seasoning funds are used to verify what?
• Which of the following statements is true concerning large deposits and their definitions?
• Which federal agency enforces fair lending laws and what protections are included?
• Why is hazard insurance required in a mortgage and what does it typically cover?
• What would be the total gross income reported for Ms. Armstrong on her W-2 if her previous two years showed $48,048 and $46,116?
• A self-employed borrower (Schedule C) is typically required to provide a year-to-date paystub. Is this statement true or false?
• What best describes private mortgage insurance (PMI) and mortgage insurance premium (MIP) and when they are typically required?
• What does a program description typically summarize for a loan to a specific lender/investor?
• What defines a Qualified Mortgage (QM)?
• A veteran can transfer a portion of their entitlement to another veteran. Is this statement true or false?
• What is the purpose of the Closing Disclosure (CD)?
• What is Ms. Armstrong's monthly base income from her hourly wage?
• The Closing Disclosure must align with the Loan Estimate (LE) and reflect actual figures. Which statement best describes this requirement?
• Seasoning funds help prevent fraud by verifying what?
• What is the trend in mortgage interest rates when the Consumer Price Index (CPI) goes up?
• What constitutes predatory lending practices and how are they avoided?
• In appraisal practice, what is a 'comparable' used for?
• What are the primary roles of a mortgage loan originator (MLO) vs an underwriter during loan processing?
• What does RESPA Section 9 prohibit?
• What is the main purpose of the Closing Disclosure?
• What is USPAP and why is it important in appraisal practice?
• Which item is generally considered a prepaid item in closing costs?
• What is the primary purpose of selling mortgages to investors in the secondary market?
• What is a settlement statement and what does it show at closing?
• If a borrower has a loan amount of 225,000 and the lower of appraised value and purchase price is 315,000, what is the LTV?
• What does MI stand for in the context of FHA loans?
• Must the builder provide an appraisal certificate on an FHA new construction loan before closing?
• For a VA loan, what is the typical down payment requirement and funding fee arrangement?
• Does the VA set its own maximum loan limits?
• In an ARM, what are the rate adjustment index and margin?
• If a veteran has previously used their VA entitlement, what may their COE reflect?
• What is the purpose of gift funds and what documentation is typically required?
• Which document is not required from the builder for an FHA new construction loan before closing?
• When qualifying a self-employed borrower, which documents are typically reviewed?
• Which statement accurately describes PMI and MIP and when they are typically used?
• Do semi-monthly and bi-weekly payment schedules result in the same number of pay periods per year?
• What is a gift letter and why is it required?
• Which agency allows a borrower to qualify at the start rate for a fixed rate with Buydown?
• Are FHA Case Numbers tied to the property or the borrower?
• What information does a Closing Disclosure provide?
• What is the difference between capitalized interest and interest paid in arrears?
• In the context of 1-year ARMs, what does a margin of 2.5% indicate?
• If a borrower purchased a home on January 15th and moves in on March 2nd, how many days are between the purchase and move-in date?
• Which items are typically included in closing costs?
• According to mortgage guidelines, how should a borrower's overtime income be treated for qualifying purposes?
• Are HOA dues included in the PITI calculation?
• What is the difference between a rate-term refinance and a cash-out refinance?
• Which of the following is a protected class under the Fair Housing Act?
• Which of the following is NOT included in PITI?
• What is a title commitment and what does it typically show?
• What is the purpose of Loan Estimate tolerance rules and how do they affect closing costs?
• Which of the following documents is NOT required to be provided by the builder on an FHA new construction loan?
• What is the required redisclosure percentage threshold for the Truth in Lending if the APR changes on an ARM?
• Is a room addition allowed under the FHA 203(k) Limited program?
• Does a large deposit as defined by FNMA and FHLMC have any conditions for being considered large?
• Which of the following statements is true regarding FHA loans?
• Define APR and explain its relationship to the note rate.
• Under TRID, what is the purpose of the Closing Disclosure?
• Is it accurate to say that a partner's earnings portion can only be accessed from corporate tax filings?
• Which statement about USDA Rural Development loans is true regarding down payments?
• Under RESPA Section 8, what must be disclosed about affiliated business arrangements?
• What are discount points and how do they affect rate, payment, and APR?
• Which statement is true about contingencies in a purchase agreement?
• What does LTV stand for and how is it calculated?
• Where can a partner's percentage of ownership and earnings be found on their personal tax returns?
• If the monthly MI for an FHA loan is set at .85%, how is it represented in calculations?
• Which of the following is included in an escrow account?
• How does occupancy status (owner-occupied vs non-owner-occupied) impact loan pricing and underwriting?
• Which factors help ensure appraisal independence and credibility?
• On an FHA loan, should the upfront MIP be included when calculating cash-to-close?
• Which laws are cited as helping to avoid predatory lending in the underwriting process?
• Which occupancy-related condition tends to require a larger down payment?
• Which item is NOT typically considered a closing cost on the Closing Disclosure?
• What is the role of the secondary mortgage market?
• In what scenario is the seller contribution limit applicable in mortgage lending?
• Is a borrower's income a factor in determining the principal limit for a reverse mortgage?
• Can a Loan Officer find the summary of eligibility requirements in the lender specs?
• Is it true that an origination fee may be paid by the borrower on an FHA loan?
• In an adjustable-rate mortgage, what determines the fully indexed rate?
• A higher loan-to-value ratio is generally associated with what effect on pricing?
• When is flood insurance typically required?
• When must lenders provide the Loan Estimate after receiving an application?
• In which mortgage transactions does the right of rescission apply and what does it allow?
• How is back-end DTI calculated?
• What condition yields Qualified Mortgage safe harbor?
• Is unemployment income considered qualifying income for mortgage purposes?
• Which statement about title search and title insurance is true?
• Which item is not typically included in a Closing Disclosure?
• Where can income or losses from partnerships generally be found on a borrower's personal tax return?
• What is a non-arm's length transaction?
• What is a tri-merge credit report and why is it used?
• Under TRID, which documents replace the GFE and HUD-1, and what is their purpose?
• What is title insurance and who does it protect?
• What is the primary purpose of escrow accounts in residential mortgage transactions?
• Which type of loan is typically associated with Mortgage Insurance Premium (MIP) rather than Private Mortgage Insurance (PMI)?
• Which three categories of non-US Citizens may apply for a mortgage loan?
• Beyond tax returns, which documents are commonly used to verify income for a self-employed borrower?
• Is it true that the maximum loan-to-value (LTV) ratio for an FHA purchase is 97%?
• Under loan pricing terms, which statement correctly distinguishes APR from the note rate?
• How do pre-qualification and pre-approval differ in terms of underwriting completeness?
• What is the difference between a standard appraisal and a field review?
• Where can unreimbursed business expenses be found on a borrower's tax return?
• When a loan's servicing is transferred to a new servicer, what is the typical process for borrowers?
• What is RESPA and what disclosures does it influence during the loan process?
• Which statement correctly describes the purpose of a title insurance policy and the difference between lender's and owner's policies?
• Under TRID, what triggers a re-disclosure?
• Desktop Underwriting (DU) can lead to a decision of Approve/Ineligible for a loan with excellent credit qualifying as a jumbo loan program. Is this statement true or false?
• What does PITI stand for?
• What is a rate lock and why is it used?