Real Estate Sales Exam FREE Real Estate Sales Financing and Mortgages Questions and Answers 2

Question 1

What is the primary purpose of a loan estimate (LE) as required by the TILA-RESPA Integrated Disclosure (TRID) rule?

Accepted Answer

To provide borrowers with estimated loan costs within three business days of application

Answer

To lock in the interest rate for 60 days

Answer

To serve as the final closing document

Answer

To replace the need for a title search

Question 2

In a wraparound mortgage, what happens to the original loan?

Accepted Answer

It remains in place while the new loan wraps around it

Answer

It is paid off immediately at closing

Answer

It is assumed by the buyer with lender approval

Answer

It converts to an adjustable-rate mortgage

Question 3

Which type of mortgage clause prevents a borrower from paying off the loan early without penalty?

Accepted Answer

Prepayment penalty clause

Answer

Acceleration clause

Answer

Defeasance clause

Answer

Subordination clause

Question 4

What does the debt-to-income (DTI) ratio measure in mortgage qualification?

Accepted Answer

The borrower's monthly debt obligations compared to gross monthly income

Answer

The ratio of the property value to the loan amount

Answer

The interest rate compared to the principal balance

Answer

The down payment percentage relative to closing costs

Question 5

What is the key difference between a purchase money mortgage and a home equity loan?

Accepted Answer

A purchase money mortgage is used to buy the property, while a home equity loan borrows against existing equity

Answer

A purchase money mortgage has no interest, while a home equity loan does

Answer

A purchase money mortgage is only for commercial properties

Answer

There is no difference between the two

Question 6

Under the Truth in Lending Act (TILA), what must lenders disclose to borrowers as the total cost of credit expressed as a yearly rate?

Accepted Answer

The annual percentage rate (APR)

Answer

The note rate

Answer

The discount rate

Answer

The prime rate