NMLS General Mortgage Knowledge Practice Test Questions

1) The underwriting stage of the mortgage loan application is the longest part. How long does the underwriting process last?

2) When it comes to home loans, lenders should always find ways to help the client save money. So why might an applicant NOT pick an adjustable-rate mortgage (ARM)?

3) One of the most important parts of the loan origination stage is the documents that the lender and applicant must fill in and sign. These documents ensure:

4) Many regard the origination process as the most crucial part of the whole mortgage process. How true is this statement?

5) In the final tally-up of the mortgage, what is the average mortgage loan closing cost?

6) When an application is returned, there are more outcomes than just “approved” or “declined.” Of these other outcomes, what does a suspended application mean?

7) In the application stages of securing a mortgage, what is the purpose of the origination process for the lender and applicant?

8) In the Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act, what is Regulation X?

9) In every stage of the mortgage application process, lenders are regulated by laws. So what laws are present that help outline the mortgage closing process?

10) On the topic of mortgage regulations, there are many laws that help make the lending profession a safer place for lenders and applicants alike. In these laws, Regulation Z is important for many reasons, but what is it NOT?

11) Although clients have a lot of freedom when it comes to what lender and mortgage they agree to, there is a limitation to when they can back out of a loan after it is signed. What is the period to back out of a loan under the notice of right to cancel?

12) At the end of the underwriting stage, if a client’s application is declined, is an underwriter’s decision final?

13) In the business of lending money, there are a lot of financial terms that lenders must get their heads around. So, when it comes to discussing agreement finances, what is an escrow account?

14) Of the many types of mortgages in the US, what is the most common?

15) How true is it that during the mortgage loan closing process, lenders can charge junk fees?

16) In this business of mortgages and securing loans to purchase properties, what is a Title?

17) There are many laws that regulate and prohibit what a lender can or cannot charge an applicant. In these laws, can a mortgage originator assign a fee to an applicant’s loan total?

18) After the closing of the mortgage loan, the applicant is now the proud owner of a loan. But this is not the end of the lender’s affairs with their client as they continue to work together to pay off the secured loan. In this repayment agreement, what is a mortgage loan service?

19) When it comes to mortgage loans, is there a mortgage specific to renovations?

20) In the closing stage of the mortgage application, if the loan is for purchasing a home, is it true that a closing agent may sign house titles as part of the mortgage closure?

21) There are many types of mortgage loans that a lender can offer; among them is what is called a jumbo loan. So, what factors might cause a lender to recommend a jumbo mortgage?

22) In the loan origination process, an applicant will require a lot of personal documents to make the mortgage process easier. But what information should an applicant NOT need to give a lender to get a loan?

23) The lender’s relationship with their client doesn’t end until the client has repaid their loan in full. During this tenure, they will also work closely with a mortgage servicer. What is the difference between a mortgage lender and a servicer?

24) A lender should look closely at each loan case they acquire to ensure that an applicant can commit to a loan. As part of this, is it true that an applicant must provide proof of income to get approval?

25) Where can an underwriter get the latest updates for official underwriting standards?

26) Mortgage Insurance Premiums (MIPs) help protect FHA-backed lenders from many factors by the lender offering lower down payments on loans. What do these risks entail?

27) Applying for a mortgage is a lengthy process with a lot of rules and regulations, but how long does approval usually take for an applicant to get a response to their application?

28) If a client wants to find ways to save money, why might a lender suggest a fixed-rate mortgage to make repayments easier to budget?

29) A lender should know the ins and outs of mortgage products and services and thus be able to offer advice for those that want different mortgage options. So, what mortgage offers smaller down payments for those that cannot secure a conventional loan?

30) When it comes to mortgages, the most common type is a conventional mortgage; however, for another large portion, it is one issued by the government. How is this government-insured loan different from other mortgage loans?

31) What does a reverse mortgage do?

32) How true is this statement that the type of loan and interest rate is determined at the origination period?

33) Mortgages that stick to standard loan rules are known as conventional loans; what are these mortgage types, and why are they so popular?

34) Who does a mortgage service pass on payments to?

35) Regulation X in the Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act guides professional mortgage servicers. What should a mortgage servicer NOT do as part of this law?

36) Part of the cost of the mortgage will also include a fee to pay for the mortgage loan service. How much is a mortgage loan service for an applicant?

37) Once an applicant has applied for a loan, the application enters the underwriting stage of the mortgage application process. What is mortgage loan underwriting?

38) During the loan application process, a client should supply a lot of documents and supportive evidence. However, what documents does an applicant NOT need to provide?

39) With the importance of the mortgage application weighing heavily on the underwriting process, what does an underwriter look at?

40) Lenders have many responsibilities to look after their clients to ensure a positive experience during the lending process. Part of this includes providing many documents, and part of this is the Closing Disclosure. What is the purpose of this document?

41) If an applicant were to receive conditional approval, what does that mean?

42) Being the moderate third party in a mortgage agreement is an important job, so is there a mortgage-servicing law in place?

43) An underwriter takes their job seriously, as it will be up to them to decide the fate of a mortgage application based on provided evidence and write up the final mortgage agreement. What isn’t an official underwriting standard?

44) Once an underwriter has approved an application, what is part of the mortgage loan closing process?

45) During the closing stage of the mortgage application, what documents might an applicant receive to finalize the whole process and obtain a loan?