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NMLS PRACTICE TEST HARD QUESTIONS / COMPLETE ACCURATE EXAM QUESTIONS WITH
DETAILED, VERIFIED ANSWERS / NEWEST 2025
"If an applicant works 40 hours every week and is paid $13.52 per hour, what is the applicant's monthly income? A.) $2,163. B.) $2,343. C.) $2,379.
D.) $2,487.68 - CORRECT ANSWER B.) $2,343.
$13.52x 40 hours = $540.8 x 52 weeks = $28,121.6 annually /12month = $2,343.47 Monthly income" "The requirement for private mortgage insurance is generally is continued when the loan-to- value ratio falls below: A.) 20% B.) 50% C.) 80%
D.) 90% - CORRECT ANSWER C.) 80%"
"Which of the following documents itemizes all settlement costs including lender charges? A.) Agreement of sale B.) HUD-1/closing Disclosure C.) Form 1003
D.) Forbearance agreement - CORRECT ANSWER B.) HUD-1/closing Disclosure"
"What does a loan originator use to determine the estimated value of a property based on an analytical comparison of similar property sales? A.) An appraisal B.) A market survey C.) An area survey
D.) A Cost-benefit analysis - CORRECT ANSWER A.) An appraisal"
"Which of the following methods of disclosure does NOT meet the requirements of Equal Credit Opportunity Act (ECOA)?
A.) E-mail B.) Mailed letter C.) Telephone
D.) Faxed letter - CORRECT ANSWER C.) Telephone"
"Term "20 basis points" expressed as a percentage is: A.) 0.2% B.) 0.20% C.) 2.00%
D.) 20.00% - CORRECT ANSWER B.) 0.20%
one hundredth of one percent, used chiefly in expressing differences of interest rates. 0. so 0.01 x20 = 0.2" "FHA loans are: A.) Partially guaranteed B.) 100% insured C.) Exempt
D.) Entitled - CORRECT ANSWER A.) Partially guaranteed"
"The late fee for a conventional loan is: A.) 3% of principle and interest B.) 4% of principle and interest C.) 5% of principle and interest
D.) 10% of principle and interest - CORRECT ANSWER C.) 5% of principle and interest"
"A funding fee if required for a: A.) FHA loan B.) VA loan C.) Jumbo loan
D.) Conventional loan - CORRECT ANSWER B.) VA loan"
C.) Grantee and two witnesses
D.) Grantee only - CORRECT ANSWER B.) Grantor and two witnesses"
"A loan on personal property only known as: A.) Package mortgage B.) Chattel mortgage C.) Furnishing mortgage
D.) Exotic mortgage - CORRECT ANSWER B.) Chattel mortgage
Investopedia Chattel mortgage is a legal term used to describe a loan arrangement in which an item of movable personal property is used as security for the loan. The movable property, or chattel, guarantees the loan in this type of mortgage. This differs from a conventional mortgage in which the loan is secured by a lien on real property." "PITI payments do NOT include which of the following: A.) Principle B.) Funding Fee C.) Hazard Insurance
D.) Interest - CORRECT ANSWER B.) Funding Fee"
"Which law prohibits discrimination by lenders? A.) Truth-in-Lending B.) Real Estate Settlement Procedures Act C.) Equal Credit Opportunity Act
D.) Patriot Act - CORRECT ANSWER C.) Equal Credit Opportunity Act"
"A property sold for $200,000 and was appraised at $180,000. The borrower received a loan for $150,000. What is the loan-to-value? A.) 75% B.) 83.3% C.) 90%
D.) 92.4$ - CORRECT ANSWER B.) 83.3%"
"How many days does a lender have to send an adverse action notice? A.) 5 B.) 10 C.) 30
D.) 60 - CORRECT ANSWER C.) 30"
"The GFE/Loan Estimate must be mailed or given to the borrower within how many days after rceiving the signed application? A.) 3 business days B.) 7 business days C.) 10 business days
D.) 30 business days - CORRECT ANSWER A.) 3 business days"
"What minimum percentage o ownership qualifies an individual as self-employed? A.) 5% B.) 10% C.) 25%
D.) 50% - CORRECT ANSWER C.) 25%"
"A salaried employee may have to produce which of the following documents to obtain a loan? A.) 90 day pay stubs B.) 2 years W2's C.) Profit and Loss statement
D.) Balance sheet - CORRECT ANSWER B.) 2 years W2's"
"How may months must be left on an automobile lease to include it as a debt? A.) 2 months B.) 5 months C.) 10 months
D.) It is always included - CORRECT ANSWER D.) It is always included"
"Who is responsible for maintaining the national flood maps? A.) HUD B.) FEMA C.) FHA
D.) VA - CORRECT ANSWER B.) FEMA"
"A VA appraisal is known as a: A.) CRV B.) Veteran's appraisal report C.) Fannie Mae 1025
D.) AVA - CORRECT ANSWER A.) CRV"
"Fannie Mae's automated underwriting system is known as: A.) Fannie Mannie B.) Software Helper C.) Desktop Underwriter
D.) Loan Prospector - CORRECT ANSWER C.) Desktop Underwriter"
"Which types of loans are meant for rural areas? A.) VA B.) FHA C.) USDA
D.) RAL - CORRECT ANSWER C.) USDA"
"What is the maximum allowable amount of VA seller concessions? A.) 2% B.) 3% C.) 4%
D.) 5% - CORRECT ANSWER C.) 4%"
"When a property increases in value for any reason this is known as:
A.) Acceleration B.) Appreciation C.) Accumulation
D.) Acclimation - CORRECT ANSWER B.) Appreciation"
"Which of the following is incorrect regarding an adjustable-rate mortgage? A.) The index is fixed B.) The margin is fixed C.) There are rate caps on both the adjustment period and the life of the loan
D.) LIBOR is a typical index used - CORRECT ANSWER A.) The index is fixed"
"Which of the following is NOT a fully amortized loan? A.) Term mortgage B.) Fixed-rate mortgage C.) Adjustable-rate mortgage
D.) Bi-weekly mortgage - CORRECT ANSWER A.) Term mortgage"
"Which of the following is a negatively amortizing loan? A.) Reverse mortgage B.) Balloon mortgage C.) Term mortgage
D.) Wrap mortgage - CORRECT ANSWER A.) Reverse mortgage"
"Fannie Mae does NOT require: A.) 6 months of bank statements B.) Verifiable funds C.) 2 years of addresses
D.) Stable 2 year work history - CORRECT ANSWER A.) 6 months of bank statements"
"A note is: A.) The document that conveys title B.) The pledge of the property as collateral for the loan
"A mortgagor's title insurance policy is: A.) Transferable B.) Required C.) Based on purchase price
D.) Never used - CORRECT ANSWER C.) Based on purchase price"
"The assignee of a mortgage and note is participating the in the: A.) Primary lending market B.) Capital market C.) Secondary mortgage market
D.) Options market - CORRECT ANSWER C.) Secondary mortgage market"
"VA loans are: A.) Partially guaranteed B.) Insured C.) Exempt
D.) Entitled - CORRECT ANSWER A.) Partially guaranteed"
"The late fee for a VA loan is: A.) 3% of principal and interest B.) 4% of principal and interest C.) 5% of principal and interest
D.) 10% of principal and interest - CORRECT ANSWER B.) 4% of principal and interest"
"What clause in a mortgage allows the lender to call the entire loan balance due? A.) Defeasance B.) Escalation C.) Acceleration
D.) Exculpatory - CORRECT ANSWER C.) Acceleration"
"What clause in a mortgage prevents the lender from recovering additional assets from the mortgagor if there is a shortfall in the foreclosure proceeds
A.) Forbearance B.) Escalation C.) Acceleration
D.) Exculpatory - CORRECT ANSWER D.) Exculpatory"
"What term describes the intentional delay of action on the part of the lender upon a borrower's default? A.) Forbearance B.) Escalation C.) Acceleration
D.) Exculpatory - CORRECT ANSWER A.) Forbearance"
"Which of the following does NOT appear in a lock-in agreement? A.) Expiration date B.) APR C.) Lock-in fee
D.) Interest rate - CORRECT ANSWER B.) APR"
"Loan Prospector can NOT be used for which type of loans? A.) Conventional B.) VA C.) FHA
D.) Commercial - CORRECT ANSWER D.) Commercial"
"A five bedroom, one bathroom house is an example of: A.) Appreciation B.) Functional Obsolescence C.) Economic Obsolescence
D.) Residential Obsolescence - CORRECT ANSWER B.) Functional Obsolescence"
"Which of the following is NOT a benefit of an FHA loan? A.) Favorable interest rates
B.) Margin - Index = fully indexed rate C.) Index + Margin = fully indexed rate
D.) Index - Margin = fully indexed rate - CORRECT ANSWER C.) Index + Margin = fully indexed
rate" "The maximum term for a FHA loan is: A.) 15 years B.) 30 years C.) 40 years
D.) 50 years - CORRECT ANSWER B.) 30 years"
"Which of the following is NOT an involuntary lien A.) IRA lien B.) Judgment lien C.) Mortgage lien
D.) Mechanic's lien - CORRECT ANSWER C.) Mortgage lien"
"The most comprehensive form of ownership is: A.) Real Estate Investment Trust B.) Fee simple absolute C.) Tenants in common
D.) Joint tenancy - CORRECT ANSWER B.) Fee simple absolute"
"Which is NOT a component of a valid contract? A.) Agreement B.) Consideration C.) Two witnesses
D.) Competent parties - CORRECT ANSWER C.) Two witnesses"
"Which law allows consumers a free copy of their credit report every year? A.) Homeowner's Protection Act B.) The Fair and Accurate Credit Transaction Act C.) Truth-in-Lending
D.) The Equal Credit Opportunity Act - CORRECT ANSWER B.) The Fair and Accurate Credit
Transaction Act" "Which law required the interviewer to complete the Government Monitoring section on the 1003? A.) Homeowner's Protection Act B.) The Fair and Accurate Credit Transaction Act C.) Truth-in-Lending
D.) The Equal Credit Opportunity Act - CORRECT ANSWER D.) The Equal Credit Opportunity
Act" "Which law entitles an applicant to a copy of his property appraisal report? A.) Homeowner's Protection Act B.) The Fair and Accurate Credit Transaction Act C.) Truth-in-Lending
D.) The Equal Credit Opportunity Act - CORRECT ANSWER D.) The Equal Credit Opportunity
Act" "Who enforces RESPA violations? A.) FTC B.) CFPB C.) FHA
D.) FCC - CORRECT ANSWER B.) CFPB"
"Which law requires that the Special Information booklet be given to borrowers? A.) Truth in Lending B.) Real Estate Settlement Procedures Act C.) Homeowner's Protection Act
D.) The Equal Credit Opportunity Act - CORRECT ANSWER B.) Real Estate Settlement
Procedures Act" "What is the fine for violating the Federal Do Not Call Rules? A.) $5, B.) $11,
"When the mortgagor and the mortgagee title insurance policies are issued at the same time, this is known as: A.) Simultaneous issue B.) Concurrent issue C.) Subsequent issue
D.) Dual issue - CORRECT ANSWER A.) Simultaneous issue"
"A shrubbery hedge is one example of an: A.) Encumbrance B.) Easement C.) Entitlement
D.) Acceptable title impediment - CORRECT ANSWER D.) Acceptable title impediment"
"Which of the following is NOT a characteristic of a Tenants in Common form of ownership: A.) Equal shares B.) Buy at different times C.) Right survivorship
D.) Ability to will share - CORRECT ANSWER C.) Right survivorship"
"Who does Fannie Mae hold responsible for the quality of an appraisal? A.) Appraiser B.) Borrower C.) Mortgage broker
D.) Lender - CORRECT ANSWER D.) Lender"
"Which law is known as Regulation B? A.) Truth-in-Lending B.) Real Estate Settlement Procedures Act C.) Equal Credit Opportunity Act
D.) Patriot Act - CORRECT ANSWER C.) Equal Credit Opportunity Act"
"The enforcement of a lien is known as: A.) Closing B.) Foreclosure C.) Warranty inspection
D.) Police Action - CORRECT ANSWER B.) Foreclosure"
"The minimum percentage of ownership in a related service required a conflict of interest disclosure? A.) 5% B.) 10% C.) 25%
D.) 50% - CORRECT ANSWER B.) 10%"
"Which law defines the right of rescission? A.) Truth-in-Lending B.) Real Estate Settlement Procedures Act C.) Equal Credit Opportunity Act
D.) Patriot Act - CORRECT ANSWER A.) Truth-in-Lending
Investopedia A right of rescission is a right under American federal law set forth by the Truth in Lending Act (TILA) that gives a borrower the right to cancel a home equity loan or line of credit with a new lender, or to cancel a refinance transaction done with another lender other than the current mortgagee within three days of closing. The right is provided on a no-questions-asked basis, and the lender must give up its claim to the property and refund all fees within 20 days of exercising of the right of rescission." "The lender has how many days to send the Satisfaction of Mortgage letter to the borrower once the loan balance is paid? A.) 30 days B.) 60 days C.) 90 days
D.) 120 days - CORRECT ANSWER B.) 60 days"
"Which of the following increases cap rate? A.) Lower purchase price B.) Increase purchase price C.) Decrease cash flow
D.) Increase interest rate - CORRECT ANSWER B.) Increase purchase price"
"There are 10 days left in the month. The purchase price is $150,000, the loan amount is $100, and the interest rate is 6%. How much mortgage interest must the borrower pay at closing? A.) $164.
Investopedia The income approach is a real estate appraisal method that allows investors to estimate the value of a property by taking the net operating income of the rent collected and dividing it by the capitalization rate." "A mortgage is: A.) The document that conveys title B.) The pledge of the property as collateral for the loan C.) The borrower's IOU
D.) The document that transfers contractual rights to another investor - CORRECT ANSWER
D.) The document that transfers contractual rights to another investor" "An adjustable-rate mortgage can adjust after 2 years with an adjustment cap of 3% per period and a lifetime cap of 7%. The staring interest rate is 4% What is the maximum interest that can be charged at the time o the first adjustment? A.) 5% B.) 7% C.) 10%
D.) 11% - CORRECT ANSWER B.) 7%"
"The purchase price of a home is $325,000 and the appraisal price is $350,000. If the first mortgage is in the amount of $200,000 and the second mortgage is $60,000. What is the combined loan-to-value ratio? A.) 78.3% B.) 80.0% C.) 86.7%
D.) 92.3% - CORRECT ANSWER B.) 80.0%
"The purchase price of a home is $375,000 and the buyer will assume a $175000 1st mortgage. The loan-to-value cannot exceed 85%. What is the maximum amount of the new 2nd mortgage. A.) $130, B.) $143, C.) $162,
D.) $171,260 - CORRECT ANSWER B.) $143,
$375,000 x .85 (85%) = $318,750 - $175,000 = $143,750" "Freddie Mac was originally known as: A.) Federal Home Loan Mortgage Corporation B.) Federal National Mortgage Association C.) Fair Discount Interest Rates
D.) Free Certificate of Deposits - CORRECT ANSWER A.) Federal Home Loan Mortgage
Corporation" "Fannie Mae allows what amount of fees to be charged to a credit card? A.) 1 % of the loan amount plus $500 for the appraisal and credit report B.) 2 % of the loan amount plus $500 for the appraisal and credit report C.) 3 % of the loan amount plus $500 for the appraisal and credit report
D.) 4 % of the loan amount plus $500 for the appraisal and credit report - CORRECT ANSWER
A.) 1 % of the loan amount plus $500 for the appraisal and credit report" "Which type of co-ownership permits the property to pass an heir? A.) Collaboration B.) Tenants in common C.) Joint tenancy
D.) Subordination - CORRECT ANSWER B.) Tenants in common"
"The economic concept which states that a knowledgeable buyer will pay no more for one property than they would pay for an equally desirable comparable property is: A.) Principle of Substitution B.) Principle of Highest and Best Use C.) Principle of Market Value
D.) Principle of Intelligent Purchases - CORRECT ANSWER A.) Principle of Substitution"
"Which law is also known as Regulation X A.) Truth in Lending B.) Real Estate Settlement Procedures Act C.) Homeowner's Protection Act
D.) The Equal Credit Opportunity Act - CORRECT ANSWER B.) Real Estate Settlement
Procedures Act" "Which law protects an individual's confidential information?
