Free New York Finance Practice Test — LicenseIQ

Question 1

Under the statewide MRT structure, the basic tax rate is:

Accepted Answer

The basic tax is 50¢ per $100. The special additional tax is 25¢, and the additional tax is 25¢ (30¢ in MCTD counties). $2 per $500 is the transfer tax rate.

Question 2

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 3

A seller wants the buyer to take over her low-rate mortgage, but the mortgage contains an alienation clause. This clause allows the lender to:

Accepted Answer

An alienation (due-on-sale) clause lets the lender call the loan due upon transfer, preventing assumption without lender approval.

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

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

A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

Accepted Answer

At 95% LTV the down payment is 5% of price. Price = $18,000 / 0.05 = $360,000; loan = $342,000.

Question 7

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 8

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 9

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 10

A buyer contracts to buy a home for $300,000, but it appraises at $290,000. The lender offers 75% LTV. What is the maximum loan?

Accepted Answer

LTV is applied to the LESSER of price or appraised value: $290,000 x 0.75 = $217,500. Using the $300,000 price ($225,000) is the common mistake.

Question 11

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 12

Before commencing foreclosure on a home loan, a New York lender must send the borrower a pre-foreclosure notice at least how many days in advance?

Accepted Answer

RPAPL §1304 requires a 90-day pre-foreclosure notice, including a list of housing counseling agencies.

Question 13

New York forecloses residential mortgages primarily through:

Accepted Answer

New York is a judicial foreclosure state. The lender sues, obtains a judgment of foreclosure and sale, and a referee conducts the auction.

Question 14

Under federal rules, a lender must automatically cancel borrower-paid PMI when the loan balance reaches what percentage of the original value (purchase price)?

Accepted Answer

PMI terminates automatically at 78% LTV based on original value. At 80% LTV the borrower may REQUEST cancellation, which is the tempting distractor.

Question 15

A home sells for $389,000. The seller pays a 5% commission, a $212,600 mortgage payoff, $1,200 attorney fee, $1,950 transfer tax and $600 in other costs. What are the seller's net proceeds?

Accepted Answer

Commission = $389,000 x 0.05 = $19,450. Total costs = $19,450 + $212,600 + $1,200 + $1,950 + $600 = $235,800. Net = $389,000 - $235,800 = $153,200.

Question 16

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 17

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 18

New York's mortgage recording tax is calculated on:

Accepted Answer

The MRT applies to the principal debt secured by a mortgage when it is recorded.

Question 19

On a $250,000 loan, how much is 2 discount points?

Accepted Answer

1 point = 1% of the loan. 2 points = 0.02 x $250,000 = $5,000.

Question 20

An owner with a $300,000 mortgage balance refinances into a $380,000 loan using a CEMA. If the applicable MRT rate is 1.8%, the tax due is:

Accepted Answer

Only the $80,000 of new money (380,000 − 300,000) is taxed: 80,000 × 0.018 = $1,440. Taxing the full loan would give $6,840.

Question 21

In a New York residential foreclosure involving a home loan on an owner-occupied home, CPLR 3408 requires:

Accepted Answer

CPLR 3408 requires an early settlement conference in residential foreclosure actions involving home loans where the defendant lives in the home, with a duty to negotiate in good faith.

Question 22

For one- or two-family homes, when computing the additional mortgage recording tax, the first ____ of the mortgage debt is deducted.

Accepted Answer

The Tax Department explains that for one- or two-family residences the first $10,000 of principal debt is deducted in computing the additional tax only.

Question 23

A lender financing a co-op purchase typically obtains an agreement in which the co-op corporation acknowledges the lender's lien. This is called a:

Accepted Answer

A recognition agreement among the co-op, lender and shareholder recognizes the lender's security interest and typically requires notice to the lender before the lease is terminated.

Question 24

A Brooklyn condo buyer takes a $400,000 mortgage. Using an effective NYC MRT rate of 1.8% for loans under $500,000, how much MRT will the buyer pay?

Accepted Answer

400,000 × 0.018 = $7,200. The $7,700 distractor uses the 1.925% rate that applies to loans of $500,000 or more. The $1,600 distractor applies the 0.4% transfer tax rate.

Question 25

Which purchase owes NO New York mortgage recording tax?

Accepted Answer

No mortgage is recorded in an all-cash purchase, so no MRT applies. Co-op share loans are also outside the tax.

New York real estate finance practice test

1. Under the statewide MRT structure, the basic tax rate is:

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

3. A seller wants the buyer to take over her low-rate mortgage, but the mortgage contains an alienation clause. This clause allows the lender to:

4. RESPA primarily governs:

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

6. A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

7. 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?

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

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

10. A buyer contracts to buy a home for $300,000, but it appraises at $290,000. The lender offers 75% LTV. What is the maximum loan?

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

12. Before commencing foreclosure on a home loan, a New York lender must send the borrower a pre-foreclosure notice at least how many days in advance?

13. New York forecloses residential mortgages primarily through:

14. Under federal rules, a lender must automatically cancel borrower-paid PMI when the loan balance reaches what percentage of the original value (purchase price)?

15. A home sells for $389,000. The seller pays a 5% commission, a $212,600 mortgage payoff, $1,200 attorney fee, $1,950 transfer tax and $600 in other costs. What are the seller's net proceeds?

16. 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?

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

18. New York's mortgage recording tax is calculated on:

19. On a $250,000 loan, how much is 2 discount points?

20. An owner with a $300,000 mortgage balance refinances into a $380,000 loan using a CEMA. If the applicable MRT rate is 1.8%, the tax due is:

21. In a New York residential foreclosure involving a home loan on an owner-occupied home, CPLR 3408 requires:

22. For one- or two-family homes, when computing the additional mortgage recording tax, the first ____ of the mortgage debt is deducted.

23. A lender financing a co-op purchase typically obtains an agreement in which the co-op corporation acknowledges the lender's lien. This is called a:

24. A Brooklyn condo buyer takes a $400,000 mortgage. Using an effective NYC MRT rate of 1.8% for loans under $500,000, how much MRT will the buyer pay?

25. Which purchase owes NO New York mortgage recording tax?

Sources