Module 6 Exam 2024 Rated A

Module 6 Exam 2024 Rated A What is the adjustable number used to compute the interest rate on ARM? a. cap b. index c. prepayment d. margin b. What type of program does a borrower have when he exercises his right to change from an adjustable rate mortgage to a fixed rate mortgage one time during the loan term, provided certain conditions are met? a. convertible ARM b. hybrid ARM c. fixed ARM d. hybrid fixed a. Negative amortization occurs when a. a borrower suffers payment shock. b. each mortgage payment is adjusted more frequently than a typical interest rate allows. c. the payment made does not cover the interest due for that period. d. a loan decreases in value. c. Increased risk factors for subprime loans include all of the following features EXCEPT a. excessive loan fees. b. low down payment requirements. c. higher FICO scores required. d. high-interest rates. c. To qualify for a reverse mortgage, borrower Jen (who has an ownership interest in the security property) must be at least how many years old? a. 65 b. 55 c. 62 d. 60 c. Alt-A loans, also called alternative documentation loans, are loans that hold borrowers with ____ credit to different documentation standards than traditional loans. a. bad b. no c. good d. revolving c. Which scenario BEST describes a land contract? a. A seller keeps the existing loan and continues to pay on it while giving the buyer another loan. b. A buyer makes payments to the seller in exchange for the right to occupy, use, and enjoy the property, but no deed or title transfers until a specified portion of payments have been made. c. A seller leases the property with the provision that part of the rent payments be applied to the sale price if the tenant decides to purchase before the lease expires. b. d. A buyer takes over primary liability for the loan of a seller, usually implying no change in loan terms. The type of mortgage where a borrower receives a monthly check rather than making scheduled payments to a lender is known as a a. forward mortgage loan. b. budget mortgage. c. reverse mortgage. d. fully amortizing loan. c. Which statement is FALSE as it relates to a buydown plan? a. The borrower's monthly payment is higher. b. A buydown in the form of discount points appears on a Loan Estimate as a change to the borrower. c. A borrower pays for a buydown by simply prepaying some interest at closing. a. d. The lender may evaluate the borrower for a loan qualification based on the reduced payment after the buydown. An Alt-A loan is best described as a loan a. that holds borrowers with good credit to different documentation standards. b. with a higher interest rate than traditional mortgage products. c. that exceeds the maximum loan amount established by Fannie Mae.