Reviewing Test Chapter 10 Quiz Started: Nov 16, 2017 7:03 PM Finished: Nov 16, 2017 7:12 PM 1 of 1 Chapter 10 Quiz Total Grade: 14 (of possible 15 points) Question 1 of 15 Score: 1 (of possible 1 point) When compared to a conventional loan, and FHA loan: A . require more stringent qualifying standards B. be processed faster C. will usually require a lower down payment D . will result in smaller monthly payments Answer Key: C Feedback Explanation: Although the monthly payments on an FHA loan may be smaller than those on a comparable conventional loan, since the interest rate will be lower and the loan may also be made over a longer period of time; the monthly insurance premium may negate these advantages. Usually FHA loans require a smaller down payment than conventional loans. Question 2 of 15 Score: 1 (of possible 1 point)
Which of the following factors would affect the interest rate on a loan for the purchase of a residential property? A. The city in which the property is located B. The length of the loan term C. The loan-to-value ratio D. The borrower's credit rating E. Both the length of the loan and the borrowers credit rating. Answer Key: E Feedback Explanation: The length of the loan term will affect the loan's interest rate. Absent other factors, a 30-year loan will usually have a higher interest rate than a 15-year loan. The borrower's credit history may also be a factor, to the extent that a borrower with poor credit or insufficient income may still be eligible for a subprime loan with a higher interest rate. Question 3 of 15 Score: 1 (of possible 1 point) A borrower wants a 90% conventional loan that will be sold to FNMA. He will have to pay for which of the following? A. Private mortgage insurance B. FNMA premium C. Standard policy of title insurance D. Survey
Answer Key: A Feedback Explanation: FNMA will not buy a loan with a loan-to-value ratio that exceeds 80% unless it is privately insured. The borrower will be required to pay the private mortgage insurance premium.
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- Fall '17
- Janet Truscott