Free Georgia Finance Practice Test — LicenseIQ

Question 1

A conventional loan that exceeds the conforming loan limits set by the FHFA is called a:

Accepted Answer

Loans above the conforming limits cannot be sold to Fannie Mae/Freddie Mac and are non-conforming 'jumbo' loans, usually at higher rates.

Question 2

A buyer's broker must disclose to the seller adverse facts about the buyer's financial ability when:

Accepted Answer

Section 10-6A-7(b) applies the financial-ability disclosure when the transaction involves seller financing or loan assumption, and in residential deals adds the buyer's intent to occupy.

Question 3

Adding a new financing contingency to an existing sales contract is done by a(n) ____, while changing the existing closing date is done by a(n) ____.

Accepted Answer

An addendum ADDs new terms; an amendment changes existing terms. Both require agreement of both parties.

Question 4

A loan whose payments are not large enough to pay it off by the end of the term, leaving a large final payment, is a:

Accepted Answer

Partially amortized loans require a balloon payment at maturity. Negative amortization means the balance actually increases because payments don't cover interest.

Question 5

A lender approves a $276,000 loan and the buyer wants to keep an 80% LTV. What is the maximum purchase price?

Accepted Answer

Purchase price = loan / LTV = $276,000 / 0.80 = $345,000. ($220,800 wrongly multiplies by 0.80.)

Question 6

One discount point equals what percentage of the loan amount?

Accepted Answer

One point = 1% of the loan amount (not the purchase price), paid to lower the interest rate.

Question 7

A borrower paid $3,150 in points on a $210,000 loan. How many points were paid?

Accepted Answer

Points = cost / loan = $3,150 / $210,000 = 0.015 = 1.5 points (1 point = 1% of the loan).

Question 8

On the buyer's side of the closing statement, the earnest money deposit and the new mortgage loan are both:

Accepted Answer

Earnest money and loan proceeds are sources of funds that reduce what the buyer must bring, so they are buyer credits.

Question 9

A VA loan is:

Accepted Answer

VA loans are guaranteed (not insured) by the VA for eligible veterans and service members, often with no down payment, and only for a primary residence.

Question 10

A zero-down-payment government loan program aimed at low- and moderate-income buyers in eligible rural areas is offered through the:

Accepted Answer

USDA Rural Development loans serve eligible rural buyers who meet income limits, often with no down payment.

Question 11

Which federal law requires disclosure of the true cost of credit, including APR?

Accepted Answer

The Truth in Lending Act (Regulation Z) requires disclosure of finance charges and the APR. RESPA covers settlement costs.

Question 12

A buyer obtains a $320,000 30-year loan. What is the intangible recording tax?

Accepted Answer

$320,000 / $500 = 640 units x $1.50 = $960. $320 would be the transfer tax rate applied to the loan by mistake.

Question 13

The periodic report a property manager gives the owner showing rents and other income collected and expenses paid for the period is the:

Accepted Answer

The income statement (P&L) summarizes income and expenses for the accounting period, typically monthly.

Question 14

A chronological summary of all recorded documents affecting a property's title, such as deeds, mortgages and liens, is a(n):

Accepted Answer

The abstract summarizes the recorded history; the chain of title lists successive owners; an attorney's opinion of title evaluates it.

Question 15

Which loan is insured by the federal government and allows a low down payment?

Accepted Answer

FHA loans are insured by the Federal Housing Administration and permit down payments as low as 3.5%. Conventional loans are not government-backed.

Question 16

The mortgage clause that allows the lender to declare the entire balance due immediately upon the borrower's default is the:

Accepted Answer

The acceleration clause lets the lender call the entire debt due on default. The alienation (due-on-sale) clause is triggered by transfer of the property.

Question 17

The minimum down payment typically required on an FHA-insured loan is as low as:

Accepted Answer

FHA allows down payments as low as 3.5%. Zero down is associated with VA and USDA loans.

Question 18

A buyer purchases a $275,000 home with an 80% LTV loan and pays 2.5 discount points. What do the points cost?

Accepted Answer

Loan = $275,000 x 0.80 = $220,000; points = $220,000 x 0.025 = $5,500. ($6,875 wrongly applies points to the price.)

Question 19

A financing contingency in a purchase agreement protects the:

Accepted Answer

A financing (mortgage) contingency lets the buyer cancel without penalty if unable to secure the specified loan by the deadline.

Question 20

A home is worth $410,000. The owner owes $238,500 on a first mortgage and $41,200 on a home equity loan. What is the owner's equity?

Accepted Answer

Equity = value - all loan balances = $410,000 - ($238,500 + $41,200) = $410,000 - $279,700 = $130,300.

Question 21

The document issued by a VA-approved appraiser for a VA loan is the:

Accepted Answer

The VA appraiser issues a CRV. The Certificate of Eligibility establishes the veteran's entitlement before applying.

Question 22

A buyer purchases a $300,000 home with an 80% loan, pays 1 point on the loan, a $450 appraisal and $1,800 in title charges, and has already deposited $10,000 earnest money. How much must the buyer bring to closing?

Accepted Answer

Down payment = $60,000; 1 point = $240,000 x 0.01 = $2,400; total = $60,000 + $2,400 + $450 + $1,800 = $64,650; minus $10,000 earnest money = $54,650.

Question 23

A property sells for $300,000, and the buyer assumes the seller's existing $120,000 loan. What is the transfer tax?

Accepted Answer

Encumbrances existing before the sale and not removed are excluded. Taxable value = $300,000 - $120,000 = $180,000. $180,000 / 1,000 = $180. Using the full price would give $300.

Question 24

The instrument most commonly used to secure a Georgia home loan is a:

Accepted Answer

Georgia uses the security deed, under which the borrower conveys title to the lender as security, making Georgia a title theory state.

Question 25

A Georgia home sells for $385,000 with no loans assumed. What is the state transfer tax?

Accepted Answer

$1 for the first $1,000, plus $384,000 / $100 = 3,840 units x $0.10 = $384. Total = $385. $1,155 would come from applying the intangible rate.

Georgia real estate finance practice test

1. A conventional loan that exceeds the conforming loan limits set by the FHFA is called a:

2. A buyer's broker must disclose to the seller adverse facts about the buyer's financial ability when:

3. Adding a new financing contingency to an existing sales contract is done by a(n) , while changing the existing closing date is done by a(n) .

4. A loan whose payments are not large enough to pay it off by the end of the term, leaving a large final payment, is a:

5. A lender approves a $276,000 loan and the buyer wants to keep an 80% LTV. What is the maximum purchase price?

6. One discount point equals what percentage of the loan amount?

7. A borrower paid $3,150 in points on a $210,000 loan. How many points were paid?

8. On the buyer's side of the closing statement, the earnest money deposit and the new mortgage loan are both:

9. A VA loan is:

10. A zero-down-payment government loan program aimed at low- and moderate-income buyers in eligible rural areas is offered through the:

11. Which federal law requires disclosure of the true cost of credit, including APR?

12. A buyer obtains a $320,000 30-year loan. What is the intangible recording tax?

13. The periodic report a property manager gives the owner showing rents and other income collected and expenses paid for the period is the:

14. A chronological summary of all recorded documents affecting a property's title, such as deeds, mortgages and liens, is a(n):

15. Which loan is insured by the federal government and allows a low down payment?

16. The mortgage clause that allows the lender to declare the entire balance due immediately upon the borrower's default is the:

17. The minimum down payment typically required on an FHA-insured loan is as low as:

18. A buyer purchases a $275,000 home with an 80% LTV loan and pays 2.5 discount points. What do the points cost?

19. A financing contingency in a purchase agreement protects the:

20. A home is worth $410,000. The owner owes $238,500 on a first mortgage and $41,200 on a home equity loan. What is the owner's equity?

21. The document issued by a VA-approved appraiser for a VA loan is the:

22. A buyer purchases a $300,000 home with an 80% loan, pays 1 point on the loan, a $450 appraisal and $1,800 in title charges, and has already deposited $10,000 earnest money. How much must the buyer bring to closing?

23. A property sells for $300,000, and the buyer assumes the seller's existing $120,000 loan. What is the transfer tax?

24. The instrument most commonly used to secure a Georgia home loan is a:

25. A Georgia home sells for $385,000 with no loans assumed. What is the state transfer tax?

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