Preview Questions Loan Officer | Role Specific Skill

Question 1: When documenting a second mortgage, which of the following documents is typically required to ensure compliance with loan-to-value (LTV) ratios?

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A settlement statement reflecting the outstanding balance of the original mortgage

A debt-to-income (DTI) statement from the borrower

A credit report showing any outstanding obligations on the property

A current appraisal that confirms the value of the property used as collateral

Question 2: Under Regulation Z, which of the following must be disclosed by the loan officer before a borrower is obligated on a mortgage loan?

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The amount of the down payment and how it impacts the loan's interest rate

The income of the borrower must be disclosed for underwriting purposes

The finance charge and APR of the loan agreement must be disclosed in writing before closing

The borrower's credit score and the associated risk level must be disclosed to the borrower

Question 3: What does a title insurance policy protect against in the context of loan documentation?

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It ensures the borrower's ability to repay the loan over time

It guarantees that the property is free from unpaid property taxes

It provides coverage in case of natural disasters or property damage

It protects the lender against potential defects in the title, such as undiscovered liens or claims

Question 4: When assessing loan risk for a borrower with significant unsecured debt, what factor is the most critical to evaluate?

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The borrower's overall spending habits and financial discipline

The borrower's current employment stability

The borrower's credit score and debt-to-income ratio

The amount of unsecured debt relative to the borrower's assets

Question 5: What is the most effective way to explain the concept of loan pre-qualification to a first-time homebuyer client?

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Emphasize that pre-qualification is the same as full approval and requires no additional steps

Explain it as a simple process to estimate eligibility without the need for detailed documents

Discuss how pre-qualification can help identify an affordable price range

Clarify that it is just a preliminary step and may not guarantee loan approval

Question 6: In preparing loan documentation for a home equity line of credit (HELOC), which document must be submitted by the borrower?

Which action should you take?

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An appraisal report that establishes the home's current value

A detailed property insurance policy, confirming the home is adequately insured

A deed of trust, confirming the borrower's legal ownership of the property

A personal financial statement, detailing all liabilities and assets