Compucram Questions

Front 1

A $150,000 loan that requires a pricing adjustment of .75 points for LTV and 1.5 points for the property type, plus a required rate adjustment of +0.5 would require how much cash to cover the discount points charged?

Back 1

$3,375. The rate adjustment does not play a part in the discount points, but is merely an increase in the interest rate. Only the items quoted in points are translated as a dollar cost. $150,000 x 0.75% = $1,125. $150,000 x 1.5% = $2,250. $2,250 + $1,125 + $3,375 total cash required to cover the points charged.

Front 2

A borrower has a sales contract for $421,000, good credit, debt ratios of 25/32, has a stable job history, and stable residence history. She has $45,000 for a down payment. The best type of loan she should apply for is a;

Back 2

conforming loan. This loan amount is under the maximum for a conforming loan. The borrower would qualify for a conforming loan since the loan amount would be $376,000 ($421,000 + $45,000 = $376,000) Current conforming loan limit is $417,000 for most places.

Front 3

A borrower is buying a house for $150,000 at 6.5%. He provides a down payment of $15,000. How much would he have to pay for 3 discount points?

Back 3

$4,050. A point is 1% of the loan amount, so $135,000 x .01 = $1,350 per point. Three points is $4,050.

Front 4

A borrower is buying a house for $90,000. He provides a down payment of $10,000. If he pays four discount points, what is the total cost of the points?

Back 4

$3,200. $80,000 x 0.04 = $3,200

Front 5

A borrower is purchasing a home for $120,000 and closing costs total 4% of the loan amount. The seller has agreed to contribute half of the buyers closing costs. How much would the borrower need at closing in order to obtain an LTV of 85%?

Back 5

$20,040. The borrower would need 15% of the $120,000 purchase price, or $18,000 plus the additional 2% of the loan amount (120,000 - 18,000 = 102,000), or $2,040 for closing costs that the seller is not providing. $18,000 + $2,040 = $20,040.

Front 6

A borrower who has just completed a profession degree (PhD), but has no work history, would have to wait how long before adequate employment history is established?

Back 6

as soon as any probationary period with the employer expires.

Front 7

A borrower who is paid $250 gross per week will have a qualifying monthly income of how much?

Back 7

$1,083, One way to convert weekly pay is to multiply by 52 weeks, then divide by 12 months.

Front 8

A borrower with a gross of $3,000 per month would qualify for a housing payment of what amount--including taxes and insurance--using a conventional mortgage?

Back 8

$840, Conventional ratios are 28/36. with 28% of the gross monthly income allowed for the total housing payment.

Front 9

A borrower's stable monthly income is $3,000. He has 3 monthly debts: $350 car payment, $50 personal loan payment, and $50 credit card payment. What is the maximum monthly mortgage payment he would qualify for using the total debt to income ratio of 36% for a conventional loan?

Back 9

$630. Total debt service ration is calculated as $3,000 (income) multiplied by (x) 0.36, which equals $1,080. From the $1,080, you must subtract his monthly debts ($350+$50+$50), which totals $630.

Front 10

A Chapter 7 bankruptcy could show on a credit report for a maximum of how many years?

Back 10

10

Front 11

A closing that takes place in advance of the time that the actual transaction is completed is known as an;

Back 11

Escrow closing

Front 12

A constructive notice of title is an example of;

Back 12

a recorded deed or recorded note and mortgage.

Front 13

Form ___ gives the lender permission to get transcripts of the borrower's income tax returns.

Back 13

4506T

Front 14

$200,000 loan with $7,000 down would best fit what type of loan?

Back 14

FHA loan since she only has 3.5% down.

Front 15

A document that presents a final, detailed accounting of a real estate transaction is the;

Back 15

settlement statement

Front 16

A document used to disclose a borrower's net worth by itemizing assets and liabilities is a;

Back 16

financial statement

Front 17

A loan program that has a single ratio of 45% would allow a borrower with $65,000 in annual income and $490 in monthly consumer debt payments to qualify for what principal and interest payment on a home with escrow requirements of $360 monthly?

Back 17

$1,587. First determine the gross monthly income ($65,000 / 12 = $5,416). Now, determine the maximum debt ratio allowed ($5,416 x 45% = @2,437). Subtract the current debt to determine what monthly payment for which the borrower would qualify: $2,437 - $490 - $360 = $1,587

Front 18

A loan with a base rate of 6.5% requires 1.5 points for the property type and 0.875 points for the LTV with a 0.75% adjustment to the rate. What would be the actual interest rate?

Back 18

7.25%. Remember that points are a dollar cost and not added to the interest rate. The only adjustment to the rate is the 0.75% adjustment (6.5% + 0.75% interest rate).

Front 19

A problem with the title report is considered to have a ____ on the title.

Back 19

cloud

Front 20

A residential property being appraised in a location that is also zoned commercial may not receive the true value of the property; this may be a result of;

Back 20

highest and best use

Front 21

A unique property, such as a geodesic home, being purchased as a primary residence would most logically employ what method of appraisal in the absence of comparables?

Back 21

cost approach

Front 22

A VA-guaranteed loan is to be assumed by another eligible veteran. Which statement about the assuming buyer is FALSE?

Back 22

The buyer cannot hold the veteran who sells the property secondarily liable.

Front 23

A written statement made under oath by the title holder certifying there have not been any judgements, bankruptcies, or divorces since the title exam is known as an;

Back 23

affidavit of title

Front 24

After obtaining the initial application, a loan originator's next step is usually to;

Back 24

obtain a credit report

Front 25

Which statement about a VA loan is FALSE?

Back 25

A veterans parent may co-sign, which they can't.

Front 26

The appraisal approach that is most appropriate for commercial real estate is the;

Back 26

income approach

Front 27

A closing agent is responsible for all of these tasks EXCEPT;

Back 27

issuing the final loan approval, they don't.

Front 28

A closing agent is responsible for;

Back 28

-following instructions according to the sales contract

-gathering all necessary documentation to close

-preparing the settlement statement

Front 29

An example of functional obsolescence is when the subject property;

Back 29

has a single bathroom that can be accessed only through a bedroom.

Front 30

An FHA loan, which is being paid off by a refinance, is closing on the 3rd of June. The payoff that the title agency obtained was only good through the 1st of June. How many days of interest would need to be added to the payoff amount to be accurate?

Back 30

30 days. FHA loans do not have prepayment penalties, but can only be paid off on the first of the month. When a payoff occurs any day other than the 1st, interest must be paid through the end of the 1st of the following month.

Front 31

Area median income is a consideration for which type of loan?

Back 31

Rural Development. Applicants for Rural Development loans must meet certain income requirements based on the area median income (AMI).

Front 32

At what point does working with a prospect change from an inquiry to an application?

Back 32

Once the borrower submits the required information in anticipation of a credit decision.

Front 33

Cory has been on his job for one year. he typically works 42 hours a week making $16 an hour and time and a half for overtime. What is the gross monthly income used to qualify Cory?

Back 33

$2,773.33. Overtime cannot be considered unless the applicant has been on his job for at least two years, so Cory's overtime cannot be counted. To figure his base pay, use this formula: $16 an hour x 40 hours per week x 52 weeks a year / 12 months = $2773.33 gross monthly pay.

Front 34

During the closing, the transfer of title or interest from the seller to the buyer through a written instrument, such as a deed, is known as a;

Back 34

Conveyance

Front 35

During the loan application process, the initial application may be inaccurate or incomplete. Once accurate information has been obtained, the original application;

Back 35

Should always remain in the file with the corrected application.

Front 36

Equitable title is defined as;

Back 36

An interest in real property created upon the execution of a valid land contract.

Front 37

For FHA loans, which is true?

Back 37

Mortgage insurance is required throughout the life of the loan if the beginning loan balance is higher than 90% of its appraised value.

Front 38

_____ is the amount of income remaining after subtracting taxes, housing expenses, and all recurring debts and obligations from W-2 income.

Back 38

Residual income

Front 39

A borrower wants to purchase a house that happens to be in a designated special flood hazard area. Her lender will most likely require her to have flood insurance;

Back 39

for the life of the loan

Front 40

In a loan closing, hypothecation occurs. This is described as;

Back 40

Using property as collateral without surrendering use or possession of it.

Front 41

In reference to a loan closing per diem interest is;

Back 41

interest from the day of closing to the end of the month

Front 42

In the closing of a purchase on June 10 of a year that is not a leap year, and taxes of $3,650 a year ($1,850 per half), payable January 1st and July 1st each year, how much would the seller owe in taxes for the current year on the HUD-1, assuming taxes are paid in arrears?

Back 42

If taxes are paid in arrears, the seller is responsible for the taxes from the day the taxes were last paid through the day of closing. The formula to figure this is the amount of taxes divided by 365 times the number of days: $3,650 / 365 x 161 = $1610

Front 43

Larry has been on his job for one year. He currently makes $12.00 an hour at his retail job. Prior to this, he worked at a shopper's club, making $11.00 an hour. He currently works five hours of OT a week, making time and a half for all overtime. His current pay stub dated 4/15 has a YTD gross of $8,645. What is the monthly income you can use to qualify Larry?

Back 43

$2,080. Larry has been on his job for less than two years, so overtime cannot be counted - you can only count his base income. Remember to always calculate income to the year and divide by 12. Here is the calculation: $12 an hour x 40 hours a week x 52 weeks a year / 12 months = $2,080 a month.

Front 44

Market value can best be described as a property's;

Back 44

most probably selling price

Front 45

Who is responsible for the accurate accounting of all monies due to and from the parties in a real estate sale?

Back 45

Title Agent

Front 46

MIP may/will;

Back 46

remain in place throughout the life of the loan if the beginning loan balance is higher than 90% of its appraised value.

Front 47

Qualifying guidelines on an FHA loan are;

Back 47

31% housing ratio and 43% total debt to income ratio.

Front 48

Section 502 loans are a program of which government entity?

Back 48

USDA Rural Development

Front 49

Stan makes an offer of $105,000 on a house that was appraised for $112,000. If the seller accepts his offer, how much will Stan have to pay down on an FHA loan (assuming he has a FICO score above 580)?

Back 49

$3,675. An FHA loan requires at least a down payment of 3.5% of the home's purchase price or appraised value, whichever is less. If his FICO score was between 500 and 579, he would need a 10% down payment.

Front 50

States in which title is conveyed to the mortgagee are referred to as;

Back 50

title theory states

Front 51

The acceptable debt ratios for a conforming loan are;

Back 51

28/36

Front 52

What is the document that may be used by the VA to determine the maximum mortgage amount?

Back 52

Certificate of Reasonable Value (CRV)

Front 53

The down payment requirement for a USDA loan can be as little as;

Back 53

0%

Front 54

Beginning June 3, 2013, the FHA will raise its MIP schedules. For a 15-year loan term, LTV greater than 78 percent, less than 90 percent, the MIP will be;

Back 54

0.45% annually. The new MIP rates are as follows: The MIP schedule is as follows: 15-year loan term, LTV less than, or equal to, 95 percent: 0.70% annually; 30-year loan term, LTV less than, or equal to, 95 percent: 1.30% annually; 30-year loan term, LTV greater than 95 percent: 1.35% annually.

Front 55

The instrument conveying real property ownership from grantor to grantee is a;

Back 55

deed

Front 56

The lender usually does NOT allow the source of a borrower's down payment to be;

Back 56

borrowed funds

Front 57

The maximum allowable mortgage for an FHA loan varies by the;

Back 57

county or region the home is in

Front 58

Generally speaking, a borrower who gets an FHA loan is expected to make the property his or her primary residence for at least

Back 58

12 months

Front 59

The title insurance protects a title and the process of the closing against risk of defects, forgeries, and errors that occur during what time period?

Back 59

From the time the land was first registered to the time of closing.

Front 60

The UFMIP is charged on what type of mortgage loans?

Back 60

FHA loans

Front 61

The Uniform Residential Appraisal Report is used for all of these properties EXCEPT;

Back 61

condominiums

Front 62

The Uniform Residential Appraisal Report is used for;

Back 62

-Individual units in PUD

-Single-family homes

-Single-family new construction

Front 63

Susan is purchasing a house for $200,000. It was appraised for $220,000. In order to avoid paying PMI on this conventional loan, how much should Susan put down on this house?

Back 63

$40,000. She needs a down payment of 20% for an LTV of 80% to avoid paying PMI. This is based on the lesser of the appraised value or the purchasing price.

Front 64

The value of an improvement is equal to;

Back 64

what it actually contributes in value to that piece of real estate.

Front 65

To be eligible for an FHA loan, one must be;

Back 65

a US citizen and permanent resident, or non-permanent resident with a work visa.

Front 66

To calculate the housing expense ratio for a conventional loan, you take stable monthly income and multiply by;

Back 66

28% (.28) The housing expense ratio for a conventional loan is calculated by taking the borrower's stable monthly income and multiplying by 28% (0.28)

Front 67

To calculate the housing expense ratio for an FHA-insured loan, you take stable monthly income and multiply by;

Back 67

31%

Front 68

UFMIP is charged on all FHA loans and is;

Back 68

1.75% of the loan amount

Front 69

VA loans allow for a maximum LTV of what percent?

Back 69

100%

Front 70

What appraisal method would NOT be used to determine the fair market value of real estate?

Back 70

Market Value Approach.

Front 71

What entity created the Uniform Residential Loan Application, form 1003?

Back 71

Fannie Mae

Front 72

What is an advantage of a VA loan?

Back 72

a down payment is not required

Front 73

What is NOT one of the factors underwriters consider in the decision whether to grant the mortgage loan?

Back 73

cause. Among the factors that underwriters generally consider when deciding whether or not to grant the loan are: Capacity, Collateral, Credit, Character, and Conditions. The underwriter does not consider cause.

Front 74

What is NOT part of a mortgage loan application?

Back 74

Income raises that are expected.

Front 75

What is required only of a borrower applying for a VA loan in order to complete the loan application?

Back 75

Certificate of eligibility and discharge papers

Front 76

What is the basic entitlement available to veterans for a VA loan?

Back 76

$36,000

Front 77

What is the maximum seller concession for a VA loan?

Back 77

4% and unlimited discount points

Front 78

What is the minimum number of comps required by most secondary lenders to ensure an accurate estimate of value when performing the sales comparison approach?

Back 78

3

Front 79

What is the primary purpose of a VA Streamline loan?

Back 79

allow veterans to refinance a mortgage at more favorable terms.

Front 80

Chapter __ bankruptcy is also known as a liquidation proceeding.

Back 80

7

Front 81

What is the required down payment on a rural development loan?

Back 81

No down payment required

Front 82

What may have a negative impact on the value during an appraisal?

Back 82

seller concessions for borrower closing costs

Front 83

What terms do VA loan programs offer?

Back 83

30 years

Front 84

When applying for a VA loan, a veteran needs to supply the DD-214 as proof of;

Back 84

discharge

Front 85

What type of income calculation is used for VA loans?

Back 85

residual income

Front 86

When a lender requested title insurance on the subject property at the time of the closing, the title company would issue what type of protection?

Back 86

mortgagee title policy

Front 87

When calculating the debt ratio, the calculation that best represents the front ratio is monthly;

Back 87

housing debt divided by gross monthly income

Front 88

When can the real estate taxes be disregarded for the purpose of determining debt ratios?

Back 88

Real estate taxes can never be disregarded when determining debt ratios

Front 89

When evaluating monthly debt, which is NOT considered?

Back 89

credit union loan with seven payments remaining.

Front 90

When filling out the loan application, a borrower that has ownership interest in the business that employs her should be marked as self employed when that interest reaches what percentage?

Back 90

25%

Front 91

When looking at the HUD-1 Settlement Statement, which of these charges could show a change from the GFE by more than 10%?

Back 91

homeowner's insurance

Front 92

When qualifying a borrower, an installment debt does NOT need to be included in the debt ratio when the balance of the term of repayment is less than how many months?

Back 92

10

Front 93

When the appraiser researches the recent sales for identical properties in the area, then compares the subject property with the recent sales to aid in deciding property value for the subject property, he is using what approach?

Back 93

sales comparison approach

Front 94

Which characteristic distinguishes an FHA-insured loan from a conventional loan?

Back 94

FHA loans cannot have prepayment penalties

Front 95

Which element would be considered part of the gross living area?

Back 95

bedroom's walk in closet

Front 96

Which information is NOT a consideration when evaluating a loan file?

Back 96

Birthplace

Front 97

Which document is NOT necessary to conduct a loan closing?

Back 97

Appraisal

Front 98

Which information is NOT relevant in determining comparables for an appraisal?

Back 98

Sales from five years previous

Front 99

Which statement concerning homeowners association fees and the 1003 loan application is FALSE?

Back 99

Association fees are never required to be included on the 1003.

Front 100

Which type of loan does NOT require mortgage insurance of any kind when the LTV is greater than 80%?

Back 100

Rural Development

Front 101

While underwriting a borrower's loan file, you can calculate this formula: Housing plus long-term debt divided by income. What have you just determined?

Back 101

total debt to income ratio

Front 102

Which of the following is NOT a typical cause of loan delinquency?

Back 102

Property tax increase

Front 103

FICO stands for;

Back 103

Fair, Isaac and Company

Front 104

What is the biggest component of a credit score?

Back 104

payment history