SAFE MLO NMLS License Test ACTUAL
QUESTIONS AND CORRECT ANSWERS
Abstract of title (Title Report) - Correct answers✔A written history of all the transactions related
to the title for a specific tract of land. This will include a history of all liens, judgements,
easements and covenants on the property
Abusive - Correct answers✔Under the Dodd-Frank Act, this is act of a Loan Originator taking
advantage of the borrower's lack of knowledge in the mortgage process.
Accrued Interest - Correct answers✔This is the interest that is charged over the course of the
payment period.
Additional Principal Payment - Correct answers✔A payment made by a borrower of more than
the scheduled principal amount due in order to save on interest over the life of the loan and/or
pay off the loan early.
Adjustable-rate mortgage (ARM) - Correct answers✔A mortgage where the interest rate can
change at least one time over the life of the loan.
Adjustment date - Correct answers✔The date on which the interest rate changes for an
adjustable-rate mortgage (ARM).
Adjustment period - Correct answers✔The period of time between adjustment dates for an
adjustable-rate mortgage (ARM).
Adverse Action - Correct answers✔This is another way of saying the loan that was applied for is
denied.
,Affordability analysis - Correct answers✔A preliminary analysis of a borrower's ability to afford
the purchase of a home that takes into consideration factors such as income, liabilities and
available funds, as well as the type of home loan, the likely taxes and insurance for the home and
the estimated closing costs.
Affidavit - Correct answers✔This is a written sworn statement of fact voluntarily made under
oath.
Amortization - Correct answers✔The gradual repayment of a loan over a set term, with
installment payments of principal and interest, that results in the full repayment of the loan by
the final payment of the term.
Amortization table or schedule - Correct answers✔A timetable or schedule that gives you a
breakdown of your monthly payments to fully repay the loan.
Amortization term - Correct answers✔The set time to repay the loan, expressed in months. For
example, for a 15-year fixed-rate mortgage, the amortization term is 180 months.
Amount Financed - Correct answers✔This is representative of the total amount of money that the
borrower will pay back to the lender over the life of the loan. This can include items financed
beyond the loan amount.
Annual/Periodic adjustment cap - Correct answers✔A limit on how much the rate can change, on
an ARM, for all subsequent adjustments.
Annual percentage rate (APR) - Correct answers✔The cost of financing expressed as a
percentage. This will include ALL finance costs including interest and prepaid finance charges.
,This will show the borrower the cost of doing business with different lenders.
Appraiser - Correct answers✔A licensed individual who determines the value of real property
based on comparable properties in the area.
Appraisal - Correct answers✔A valuation of real property done by a licensed individual
(Appraiser). The appraisal helps us understand the value of the property based on current
conditions.
Appraisal Report - Correct answers✔The physical document given to lenders, detailing the value
of the property as determined by the appraiser.
Appraisal contingency - Correct answers✔A contingency in a sales contract that the property
must appraise at a value that is equal to or greater than your offering price.
Appreciation - Correct answers✔An increase in the value of property over time.
Assessed value - Correct answers✔The value of a property, established by a public tax assessor.
The assessed value is used to determine property taxes.
Assets - Correct answers✔Funds available to pay for cash to close. Acceptable assets for a
mortgage are any assets that are T.A.N., Traceable, Accessible, and Not a liability. Examples of
acceptable assets are: Checking & savings accounts, stocks, bonds, retirement accounts.
Assigned Loan - Correct answers✔A loan that is assigned means the debt, and all of the rights
and obligations that accompany it, are transferred from a creditor to a third party.
, Assumable loan - Correct answers✔A loan that may be transferred to someone else while
maintaining the same terms. For example, the buyer assumes the seller's loan based on the
original loan terms to seller received.
Balloon loan - Correct answers✔A loan where the borrower makes regular monthly payments for
a set period of time with a large lump sum due at the end of that period.
Bankruptcy - Correct answers✔This is a legal status of a person who cannot repay their debts to
their creditors. Most commonly bankruptcy is imposed by a court. Common forms of bankruptcy
are Chapter 7 and Chapter 13.
Bankruptcy (Chapter 7) - Correct answers✔This form of bankruptcy is used when the borrower
does not have the ability to pay back their debts and the debts are discharged by the courts. Some
debt still survives, such as alimony, child support, and sometimes the mortgage.
Bankruptcy (Chapter 13) - Correct answers✔This form of bankruptcy allows for the borrower to
reorganize their debts in an attempt to pay them back. This can be done without the creditor's
approval so long as the plan meets Chapter 13 requirements.
Basis point - Correct answers✔one 100th of 1% of the loan amount. .0001 * LA = 1 bps.
Bond - Correct answers✔An interest-bearing certificate of debt with a maturity date. A real estate
bond is a written obligation that is usually secured by a mortgage or a deed of trust.
Bonus Income - Correct answers✔Bonus Income is compensation paid in recognition for
accomplishing specific achievements. Bonus Income is not guaranteed. Examples, Christmas
bonus, performance bonuses, tenure bonuses.
QUESTIONS AND CORRECT ANSWERS
Abstract of title (Title Report) - Correct answers✔A written history of all the transactions related
to the title for a specific tract of land. This will include a history of all liens, judgements,
easements and covenants on the property
Abusive - Correct answers✔Under the Dodd-Frank Act, this is act of a Loan Originator taking
advantage of the borrower's lack of knowledge in the mortgage process.
Accrued Interest - Correct answers✔This is the interest that is charged over the course of the
payment period.
Additional Principal Payment - Correct answers✔A payment made by a borrower of more than
the scheduled principal amount due in order to save on interest over the life of the loan and/or
pay off the loan early.
Adjustable-rate mortgage (ARM) - Correct answers✔A mortgage where the interest rate can
change at least one time over the life of the loan.
Adjustment date - Correct answers✔The date on which the interest rate changes for an
adjustable-rate mortgage (ARM).
Adjustment period - Correct answers✔The period of time between adjustment dates for an
adjustable-rate mortgage (ARM).
Adverse Action - Correct answers✔This is another way of saying the loan that was applied for is
denied.
,Affordability analysis - Correct answers✔A preliminary analysis of a borrower's ability to afford
the purchase of a home that takes into consideration factors such as income, liabilities and
available funds, as well as the type of home loan, the likely taxes and insurance for the home and
the estimated closing costs.
Affidavit - Correct answers✔This is a written sworn statement of fact voluntarily made under
oath.
Amortization - Correct answers✔The gradual repayment of a loan over a set term, with
installment payments of principal and interest, that results in the full repayment of the loan by
the final payment of the term.
Amortization table or schedule - Correct answers✔A timetable or schedule that gives you a
breakdown of your monthly payments to fully repay the loan.
Amortization term - Correct answers✔The set time to repay the loan, expressed in months. For
example, for a 15-year fixed-rate mortgage, the amortization term is 180 months.
Amount Financed - Correct answers✔This is representative of the total amount of money that the
borrower will pay back to the lender over the life of the loan. This can include items financed
beyond the loan amount.
Annual/Periodic adjustment cap - Correct answers✔A limit on how much the rate can change, on
an ARM, for all subsequent adjustments.
Annual percentage rate (APR) - Correct answers✔The cost of financing expressed as a
percentage. This will include ALL finance costs including interest and prepaid finance charges.
,This will show the borrower the cost of doing business with different lenders.
Appraiser - Correct answers✔A licensed individual who determines the value of real property
based on comparable properties in the area.
Appraisal - Correct answers✔A valuation of real property done by a licensed individual
(Appraiser). The appraisal helps us understand the value of the property based on current
conditions.
Appraisal Report - Correct answers✔The physical document given to lenders, detailing the value
of the property as determined by the appraiser.
Appraisal contingency - Correct answers✔A contingency in a sales contract that the property
must appraise at a value that is equal to or greater than your offering price.
Appreciation - Correct answers✔An increase in the value of property over time.
Assessed value - Correct answers✔The value of a property, established by a public tax assessor.
The assessed value is used to determine property taxes.
Assets - Correct answers✔Funds available to pay for cash to close. Acceptable assets for a
mortgage are any assets that are T.A.N., Traceable, Accessible, and Not a liability. Examples of
acceptable assets are: Checking & savings accounts, stocks, bonds, retirement accounts.
Assigned Loan - Correct answers✔A loan that is assigned means the debt, and all of the rights
and obligations that accompany it, are transferred from a creditor to a third party.
, Assumable loan - Correct answers✔A loan that may be transferred to someone else while
maintaining the same terms. For example, the buyer assumes the seller's loan based on the
original loan terms to seller received.
Balloon loan - Correct answers✔A loan where the borrower makes regular monthly payments for
a set period of time with a large lump sum due at the end of that period.
Bankruptcy - Correct answers✔This is a legal status of a person who cannot repay their debts to
their creditors. Most commonly bankruptcy is imposed by a court. Common forms of bankruptcy
are Chapter 7 and Chapter 13.
Bankruptcy (Chapter 7) - Correct answers✔This form of bankruptcy is used when the borrower
does not have the ability to pay back their debts and the debts are discharged by the courts. Some
debt still survives, such as alimony, child support, and sometimes the mortgage.
Bankruptcy (Chapter 13) - Correct answers✔This form of bankruptcy allows for the borrower to
reorganize their debts in an attempt to pay them back. This can be done without the creditor's
approval so long as the plan meets Chapter 13 requirements.
Basis point - Correct answers✔one 100th of 1% of the loan amount. .0001 * LA = 1 bps.
Bond - Correct answers✔An interest-bearing certificate of debt with a maturity date. A real estate
bond is a written obligation that is usually secured by a mortgage or a deed of trust.
Bonus Income - Correct answers✔Bonus Income is compensation paid in recognition for
accomplishing specific achievements. Bonus Income is not guaranteed. Examples, Christmas
bonus, performance bonuses, tenure bonuses.
