NMLS SAFE Exam preparation 2023/2024 Questions and Must have marking scheme
Amortization - correct answer the process of paying off a loan by gradually reducing the balance through a series of installment payments
Partially amortized loans - correct answer otherwise known as a balloon mor...
NMLS SAFE Exam preparation 2023/2024
Questions and Must have marking scheme
Amortization - correct answer the process of paying off a
loan by gradually reducing the balance through a series of
installment payments
Partially amortized loans - correct answer otherwise known
as a balloon mortgage: provides for some, but not total,
amortization during the mortgage term.
-at the end of the loan term a large balloon payment is needed to
pay off the remaining balance
Negative Amortization - correct answer If periodic
installment payments on a loan are insufficient to pay all of the
interest due, the unpaid interest is added to the principal of a
mortgage loan, causing the loan balance to increase rather than
decrease. This is called negative amortization.
negative amortization types:
-graduated-payment mortgage
-ARM with a payment cap
-reverse mortgage
Interest-only loans (term or straight mortgage) - correct
answer provides for no amortization during the term of the
loan. The principal is repaid at the end of the loan term through
a balloon payment
,Construction Loans - correct answer used to finance the
cost of labor and materials used during construction. It extends
from the start to the completion of the work, when it is then paid
off, often with the proceeds of a more permanent form of
financing. The lender does not initially release the full loan
amount. Instead, it provides advances, or draws, as work is
completed. The entire loan amount is due in full within a short
period after completion of the work.
Prepayment penalty - correct answer imposes an extra
charge if the borrower does prepay the loan.
Due-on-sale clause - correct answer allows the lender to
accelerate the loan or to refuse to allow another person to
assume the loan, if the title is transferred.
Mortgage promissory note - correct answer The borrower's
promise to pay.
Defeasance clause in a security agreement - correct answer
provides that the lien is defeated upon repayment of the debt in
full and that the mortgage will be voided.
Hypothecation - correct answer In hypothecating the
property, the borrower pledges it as security, or collateral,
without actually giving up equitable title or possession.
Prequalification - correct answer an estimate made by a
mortgage loan originator of the amount of a loan for which the
, buyer can qualify based on his statements regarding his financial
condition
Preapproval - correct answer a letter from the mortgage
lender showing an estimate of the amount of a loan for which the
buyer can qualify, based on verification of his income and assets
Conveyance - correct answer The transfer of a title (on a
real property) from one person to another.
Final approval of a loan - correct answer subject to:
-the subject property: appraisal that give a value on the property
to support the loan; a title report; and an inspection that verifies
suitable condition of the home.
-the buyer being and remaining creditworthy
Uniform Residential Loan Application - correct answer
1003- can be completed at an in-person interview, by phone, by
mail or online, as long as all blanks are filled in.
Four categories of the URLA - correct answer 1. Type of
Mortgage and Terms of Loan
2. Property Information and Purpose of Loan
3. Borrower(s) Information
4. Details of the Transaction
Community Property - correct answer Money earned by
either spouse during marriage and all property bought with
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