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NMLS SAFE EXAM ACRONYMS Questions with Complete Solutions

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NMLS SAFE EXAM ACRONYMS Questions with Complete Solutions ARM - answerA variable-rate mortgage, adjustable-rate mortgage (ARM), or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowi...

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  • August 26, 2024
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NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
ARM - answerA variable-rate mortgage, adjustable-rate mortgage (ARM), or

tracker mortgage is a


mortgage loan with the interest rate on the note periodically adjusted based on

an index which


reflects the cost to the lender of borrowing on the credit markets.


APR - answerThe term annual percentage rate of charge (APR), corresponding

sometimes to a


nominal APR and sometimes to an effective APR (EAPR), is the interest rate for a

whole year


(annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage

loan, credit card,


etc. It is a finance charge expressed as an annual rate. Those terms have formal,

legal definitions in


some countries or legal jurisdictions, but in the United States:


The nominal APR is the simple-interest rate (for a year).

The effective APR is the fee+compound interest rate (calculated across a year).

, NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
APOR - answerThe Average Prime Offer Rate (APOR) is an annual percentage

rate that is based


on average interest rates, fees, and other terms on mortgages offered to highly

qualified


borrowers. ... A subordinate-lien mortgage is generally "higher-priced" if the

APR of this mortgage


is 3.5 percentage points or more higher than the APOR.


ATR - answerThe ATR/QM rule requires you to make a reasonable, good-faith

determination that


a member has the ability to repay a covered mortgage loan before or when you

consummate the


loan. You must consider, at a minimum, eight specific underwriting standards

when making an


ATR determination.


CLTV - answerThe combined loan-to-value (CLTV) ratio is the ratio of all secured

loans on a

, NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
property to the value of a property. Lenders use the CLTV ratio to determine a

prospective home


buyer's risk of default when more than one loan is used.


DU - answerDesktop underwriting, or DU, is an automated approval system that

calculates


whether a loan meets Fannie Mae or, in some cases, Federal Housing Authority

(FHA) loan


requirements. A DU evaluates a borrower's risk of delinquency by

comprehensively evaluating


several risk factors.


DTI - answerHere are some guidelines about what is a good debt-to-income

ratio: The "ideal" DTI


ratio is 36% or less. At least, that's the common financial advice of the "28/36

rule." This guideline


suggests keeping total monthly debt costs at or below 36% of your income, and

housing costs at or

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