PEARSON VUE EXAM PREP: FINANCING AND
SETTLEMENT COMPLETE QUESTIONS AND
CORRECT DETAILED ANSWERS | LATEST
UPDATE (2026) | ALREADY GRADED A+
Equity - CORRECT ANSWER -difference between a homes value and how much debt is owed
on it
Negative equity - CORRECT ANSWER -borrower owes more than the property is worth
Principal ($) - CORRECT ANSWER -The amount of money borrowed
Interest - CORRECT ANSWER -the price paid for the use of borrowed money
Loan term - CORRECT ANSWER -The length of time you have to pay off a loan.
Amortization - CORRECT ANSWER -paying off a loan over time
What is a point? - CORRECT ANSWER -1% of the loan amount
Buydown - CORRECT ANSWER -interest payment borrower makes to reduce interest rate
Conventional mortgage loans - CORRECT ANSWER -require down payment up to 20%
Diverse loan terms
Are conventional mortgage loans insured by the federal govt? - CORRECT ANSWER -no
, FHA Loan - CORRECT ANSWER -lower credit scores
Smaller down payment
Higher credit risk
Lower interest rates
Does FHA insure lenders? - CORRECT ANSWER -yes
Who has access to VA loans? - CORRECT ANSWER -veterans and their spouses
USDA Farm Service Agency Loan - CORRECT ANSWER -for farmers, ranchers, and rural
housing
Who funds FSA loans? - CORRECT ANSWER -congressional appropriation
Rural Development Loans - CORRECT ANSWER -Loans for family farms and rural housing
Longer payback period
Financing Instruments - CORRECT ANSWER -security instruments such as mortgages, deeds of
trust, and promissory notes
Mortgagee - CORRECT ANSWER -lender
Mortgagor - CORRECT ANSWER -borrower
Trustor - CORRECT ANSWER -borrower
Beneficiary - CORRECT ANSWER -lender
SETTLEMENT COMPLETE QUESTIONS AND
CORRECT DETAILED ANSWERS | LATEST
UPDATE (2026) | ALREADY GRADED A+
Equity - CORRECT ANSWER -difference between a homes value and how much debt is owed
on it
Negative equity - CORRECT ANSWER -borrower owes more than the property is worth
Principal ($) - CORRECT ANSWER -The amount of money borrowed
Interest - CORRECT ANSWER -the price paid for the use of borrowed money
Loan term - CORRECT ANSWER -The length of time you have to pay off a loan.
Amortization - CORRECT ANSWER -paying off a loan over time
What is a point? - CORRECT ANSWER -1% of the loan amount
Buydown - CORRECT ANSWER -interest payment borrower makes to reduce interest rate
Conventional mortgage loans - CORRECT ANSWER -require down payment up to 20%
Diverse loan terms
Are conventional mortgage loans insured by the federal govt? - CORRECT ANSWER -no
, FHA Loan - CORRECT ANSWER -lower credit scores
Smaller down payment
Higher credit risk
Lower interest rates
Does FHA insure lenders? - CORRECT ANSWER -yes
Who has access to VA loans? - CORRECT ANSWER -veterans and their spouses
USDA Farm Service Agency Loan - CORRECT ANSWER -for farmers, ranchers, and rural
housing
Who funds FSA loans? - CORRECT ANSWER -congressional appropriation
Rural Development Loans - CORRECT ANSWER -Loans for family farms and rural housing
Longer payback period
Financing Instruments - CORRECT ANSWER -security instruments such as mortgages, deeds of
trust, and promissory notes
Mortgagee - CORRECT ANSWER -lender
Mortgagor - CORRECT ANSWER -borrower
Trustor - CORRECT ANSWER -borrower
Beneficiary - CORRECT ANSWER -lender
