Official Sample Questions
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Explanation:
APR includes most fees required to obtain the loan — but hazard (homeowners) insurance is excluded because it's not considered a finance charge under TILA. It protects the property, not the credit transaction. Included in APR: * Prepaid interest * Mortgage insurance * Origination fees * Discount points
- A
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Explanation:
40 hours per week x $13.52 per hour = $540.80 (weekly income); $540.80 x 52 weeks per year = $28,121.60 (yearly income); $28,121.60 / 12 months = $2343.47 (monthly income)
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Explanation:
The NMLS unique identifier must appear on: Business cards Company websites Loan application forms However, it is not required on the CFPB special information booklet, which is a standard government document not individualized to the originator.
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Explanation:
TILA defines refinance as a new transaction that replaces and satisfies an existing loan obligation, even if it's with the same lender. It's more than just changing the terms — it's the creation of a new note.
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Explanation:
ECOA prohibits age discrimination except in limited situations: - The main exception is when the person is not legally able to contract, usually under 18. - Life expectancy or capacity to understand a contract are NOT valid reasons to deny credit.
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Explanation:
An appraisal is the formal document where a licensed appraiser analyzes recent sales of comparable properties, property conditions, location, and market trends to determine a property’s value.
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Explanation:
PMI is typically required when the LTV exceeds 80%. Once the LTV drops to 80% or lower, PMI can be requested to be canceled. Lenders must automatically cancel it at 78% LTV, assuming timely payments.
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Explanation:
The finance charge includes all charges imposed directly or indirectly by the lender as a condition of the extension of credit. This generally includes: Per diem (prepaid) interest, Origination charges, Points, Mortgage insurance, etc. However, the appraisal fee is typically considered a third-party fee and not a finance charge, because it is for services rendered to determine the value of the property, not for obtaining credit.
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Explanation:
TILA and Dodd-Frank prohibit coercion or influence over appraisers. Telling an appraiser to adjust the value based on unrelated factors, like whether a borrower will keep living there, violates appraiser independence. Permissible underwriter actions include: - Requesting a review - Asking for factual corrections - Providing additional property info
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Explanation:
$160,000 (sale price) x .20 (down payment percentage) = $32,000; $32,000 - [$5,000 (earnest money) + $2,000 (option money)] = $25,000