Free North Dakota Finance Practice Test — LicenseIQ

Question 1

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 2

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 3

A buyer purchases a home for $425,000 with a loan of $361,250. What is the LTV?

Accepted Answer

LTV = loan / price = $361,250 / $425,000 = 0.85 = 85%. (15% is the down payment percentage.)

Question 4

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 5

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 6

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 7

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 8

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 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 married couple's homestead is titled only in the husband's name. To sell or mortgage it:

Accepted Answer

NDCC 47-18-05 bars conveying or encumbering a married person's homestead unless both spouses execute and acknowledge the instrument, regardless of title or value.

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

Under the Truth in Lending Act (Regulation Z), which phrase in an ad is a 'trigger term' requiring full credit disclosures?

Accepted Answer

Specific terms like the down payment amount, number or amount of payments, finance charge or repayment period trigger full disclosure (including APR). General statements do not.

Question 13

A short-term loan used to buy a new home before the borrower's current home sells is a:

Accepted Answer

A bridge loan 'bridges' the gap between buying and selling and is typically repaid within about 12 months when the old home sells.

Question 14

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 15

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 16

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 17

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 18

Private mortgage insurance (PMI) is typically required on a conventional loan when the down payment is:

Accepted Answer

PMI protects the lender and is generally required when the borrower puts down less than 20% (LTV over 80%).

Question 19

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 20

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 21

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 22

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 23

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 24

A buyer phones a licensee and starts describing his finances. A written form is impractical. The licensee should:

Accepted Answer

N.D. Admin. Code 70-02-03-15.1 permits oral disclosure when a written form is impractical, with written disclosure as soon as practicable. Waiting until the purchase agreement misses the first-substantive-contact deadline.

Question 25

A home is worth $400,000 with a $210,000 mortgage signed by both spouses. A judgment creditor with an unsecured $75,000 judgment can reach how much equity?

Accepted Answer

Equity is $400,000 − $210,000 = $190,000. NDCC 47-18-04 lets ordinary creditors reach only the value above liens plus $150,000: $190,000 − $150,000 = $40,000.

North Dakota real estate finance practice test

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

2. 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?

3. A buyer purchases a home for $425,000 with a loan of $361,250. What is the LTV?

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

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

6. 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:

7. 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) .

8. 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:

9. A VA loan is:

10. A married couple's homestead is titled only in the husband's name. To sell or mortgage it:

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

12. Under the Truth in Lending Act (Regulation Z), which phrase in an ad is a 'trigger term' requiring full credit disclosures?

13. A short-term loan used to buy a new home before the borrower's current home sells is a:

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

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

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

17. 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?

18. Private mortgage insurance (PMI) is typically required on a conventional loan when the down payment is:

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

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

21. 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:

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

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

24. A buyer phones a licensee and starts describing his finances. A written form is impractical. The licensee should:

25. A home is worth $400,000 with a $210,000 mortgage signed by both spouses. A judgment creditor with an unsecured $75,000 judgment can reach how much equity?

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