Florida operates under the idea that a borrower
in a mortgage loan situation retains title to the
property. This is known as the
Detailed Answer
B. This is definitional and means that the mortgage holder (the lender) has a lien on the property.
2
The terms and conditions of the promise to pay
back money borrowed to buy a house is found
in the
Detailed Answer
C. Choices A, B, and D all relate to the document using the property as security for the note but not the terms of
the note itself.
3
The process by which a mortgage loan is paid off
in equal payments consisting of principal and
interest is called
Detailed Answer
B. Amortization results in the loan being paid off gradually over time.
4
What does a discount point do to the effective
yield that a lender gets from a mortgage loan?
Detailed Answer
A. Discount points raise the yield to the lender above that of the stated interest rate, so if points were paid to
secure a 6% loan, the yield to the bank would be more than 6%. How much more depends on how many points
are paid.
5
Equity is most accurately defined as the
Detailed Answer
B. Although, at the moment of sale, if the sale price equals the value, choices A and D would be correct, the most
accurate choice is B.
6
A mortgage lender requires a borrower to make
monthly payments—in addition to the mortgage
payments—to a special account to cover taxes and
hazard insurance costs for the property. This type
of account is commonly called a(n)
Detailed Answer
C. This is definitional. The other answer choices are made up.
7
Buyer A borrows money to buy a house. As part of
the repayment plan, when he sells the house he
will have to turn over a portion of the profit he
makes on the house to the lender. This type of
mortgage is called a
Detailed Answer
A. The shared appreciation mortgage requires some of the profit made when selling the house to be shared with
the lender.
8
What is the loan-to-value ratio above which a
borrower will typically have to purchase private
mortgage insurance?
Detailed Answer
D. The way this question is worded, you could argue that all the answers are correct, but question writers will
often ask questions like this meaning the lowest amount above which private mortgage insurance must be
purchased.
9
A conforming loan is defined as one
Detailed Answer
A. A conforming loan meets FNMA underwriting standards and limits on the loan amount.
10
An acceleration clause in a mortgage loan
Detailed Answer
D. An acceleration clause allows the lender to declare the full loan due immediately under certain circumstances
such as the buyer’s defaulting on the loan.