Free Nevada Finance Practice Test — LicenseIQ

Question 1

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 2

An agent tells a buyer he will show homes only if the buyer uses the agent's brother as mortgage broker. This is an illegal:

Accepted Answer

Conditioning one service on the purchase of another is a tying arrangement prohibited by antitrust law.

Question 3

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 4

RESPA primarily governs:

Accepted Answer

RESPA requires disclosure of settlement (closing) costs on 1-4 family residential loans and prohibits kickbacks. Rate advertising falls under TILA.

Question 5

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 6

A borrower's monthly payment does not cover the interest due, and the unpaid interest is added to the loan balance. This is:

Accepted Answer

When unpaid interest is added to principal, the balance grows - negative amortization. An interest-only loan pays all interest, so the balance stays flat.

Question 7

A lender asks a salesperson for a BPO to be used instead of an appraisal to approve a new purchase-money mortgage. The salesperson should:

Accepted Answer

Lienholders are permitted BPO clients, but NRS 645.2515 forbids using a BPO as a substitute for an appraisal in determining whether to approve a mortgage loan. A disclaimer or broker signature does not cure that.

Question 8

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 9

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 10

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 11

Under a land contract (contract for deed), during the payment period the buyer holds:

Accepted Answer

In an installment/land contract the buyer has equitable title and possession; the seller keeps legal title until the final payment.

Question 12

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 13

In the early years of a fully amortizing fixed-rate mortgage, the largest portion of each monthly payment goes toward:

Accepted Answer

Early payments are mostly interest; as the balance declines, more of each payment goes to principal.

Question 14

In a mortgage, the borrower who pledges the property as security is the:

Accepted Answer

The mortgagor (borrower) gives the mortgage to the mortgagee (lender) in exchange for the loan.

Question 15

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 16

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 17

A borrower pays $4,500 for 1.5 discount points. What is the loan amount?

Accepted Answer

Loan = cost of points / points as a percentage = $4,500 / 0.015 = $300,000.

Question 18

A mortgage lender offers a salesperson $200 for every client referred. Under RESPA this is:

Accepted Answer

RESPA prohibits kickbacks and unearned referral fees between settlement service providers and real estate licensees, even if disclosed.

Question 19

Which document is recorded in the county records and makes the property collateral for a loan?

Accepted Answer

The mortgage creates the lien and is recorded. The promissory note is the borrower's personal promise to repay and is not recorded.

Question 20

Which statement about FHA-insured loans is correct?

Accepted Answer

FHA loans are made by approved lenders and insured by FHA, with down payments as low as 3.5% and mortgage insurance premium (MIP) required on all FHA loans, for 1-4 family homes.

Question 21

Using an amortization factor of 4.77415 per $1,000 (30 years at 4%), what is the monthly principal and interest payment on a $250,000 loan?

Accepted Answer

$250,000 / $1,000 = 250; 250 x 4.77415 = $1,193.54.

Question 22

Under TRID, the borrower must receive the Closing Disclosure at least how long before loan closing?

Accepted Answer

The Loan Estimate is due within 3 business days after application, and the Closing Disclosure at least 3 business days before closing.

Question 23

After the seller's written request, the association must furnish its budget, financial statement and certificate within:

Accepted Answer

NRS 116.4109 requires the association to furnish them within 10 calendar days. Ninety calendar days is how long the package remains effective.

Question 24

The reasonably probable use of a property that is legally permissible, physically possible, financially feasible and maximally productive is its:

Accepted Answer

Highest and best use is the use producing the greatest value that meets the four tests.

Question 25

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.

Nevada real estate finance practice test

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

2. An agent tells a buyer he will show homes only if the buyer uses the agent's brother as mortgage broker. This is an illegal:

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

4. RESPA primarily governs:

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

6. A borrower's monthly payment does not cover the interest due, and the unpaid interest is added to the loan balance. This is:

7. A lender asks a salesperson for a BPO to be used instead of an appraisal to approve a new purchase-money mortgage. The salesperson should:

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

9. 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:

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

11. Under a land contract (contract for deed), during the payment period the buyer holds:

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

13. In the early years of a fully amortizing fixed-rate mortgage, the largest portion of each monthly payment goes toward:

14. In a mortgage, the borrower who pledges the property as security is the:

15. 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?

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

17. A borrower pays $4,500 for 1.5 discount points. What is the loan amount?

18. A mortgage lender offers a salesperson $200 for every client referred. Under RESPA this is:

19. Which document is recorded in the county records and makes the property collateral for a loan?

20. Which statement about FHA-insured loans is correct?

21. Using an amortization factor of 4.77415 per $1,000 (30 years at 4%), what is the monthly principal and interest payment on a $250,000 loan?

22. Under TRID, the borrower must receive the Closing Disclosure at least how long before loan closing?

23. After the seller's written request, the association must furnish its budget, financial statement and certificate within:

24. The reasonably probable use of a property that is legally permissible, physically possible, financially feasible and maximally productive is its:

25. A VA loan is:

Sources