A borrower is considering an FHA loan with a 15-year term versus a 30-year term. How does the loan term affect the annual MIP requirement?
Correct Answer
B) 15-year loans have lower MIP rates
FHA loans with terms of 15 years or less have lower annual MIP rates (typically 0.45%) compared to loans with terms greater than 15 years (typically 0.85%). This incentivizes borrowers to choose shorter loan terms when possible.
Why This Is the Correct Answer
FHA loans with terms of 15 years or less have lower annual MIP rates (typically 0.45%) compared to loans with terms greater than 15 years (typically 0.85%). This incentivizes borrowers to choose shorter loan terms when possible.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
People Also Study
Federal Mortgage-Related Laws
23% of exam
Mortgage Loan Origination Activities
25% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam
Previous Question
A married couple applies for a joint mortgage, but only one spouse provides their Social Security number, stating the other spouse 'doesn't want to be on the loan.' Both names appear as borrowers on the application. How does this affect application completeness?
Next Question
In Alaska, the conforming loan limit is set at 150% of the baseline limit. If the baseline limit is $766,550, what is Alaska's conforming limit?