In a purchase transaction, the borrower is obtaining financing to:
Correct Answer
C) Acquire ownership of real estate they do not currently own
A purchase transaction involves financing the acquisition of real estate that the borrower does not currently own. This is distinguished from refinance transactions where the borrower already owns the property and is replacing or modifying existing financing.
Why This Is the Correct Answer
A purchase transaction involves financing the acquisition of real estate that the borrower does not currently own. This is distinguished from refinance transactions where the borrower already owns the property and is replacing or modifying existing financing.
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
What is the VA funding fee for a first-time VA loan user purchasing a home with no down payment?
Next Question
A veteran used their full VA entitlement on a previous home that they sold. They now want to purchase another home for $450,000 with a VA loan. What is the maximum loan amount they can obtain without a down payment?