MLO Math Questions and Answers | Latest Update | 2024/2025 | Already Passed

MLO Math Questions and Answers | Latest Update | 2024/2025 | Already Passed A borrower buys a house for $125,000 by getting a loan for $100,000. When the loan had a balance of $60,000, he decided to refinance to lower the interest rate by 2%. To do this, he has to pay a prepayment penalty of 1.5% on the remaining principle balance. How much will that prepayment penalty cost him? $900 Math: The PPP is applied to the remaining principal balance of $60,000, which when multiplied by 1.5% equals $900 A borrower is buying a house with a sales price of $200,000 and an LTV of 75%. If he paid $3,000 in points, how many points does that represent? 2 points - With an LTV of 75%, the loan for this purchase is $150,000. On a $150,000 loan, a point costs $1,500 (150,000 x .01), so the borrower paid for two points ($3,000). A buyer of a house with a sales price of $100,000 is paying a $10,000 down payment as well as 2 discount points and 2 points for loan origination fees. What is the total cost of the points? $3,600 - The points are figured as 1% of the total loan amount ($90,000), not the sales price. Each point costs the borrower $900. Four points cost the borrower $900 x 4 for a total of $3,600. A buyer of a house with a sales price of $150,000 is paying a $30,000 down payment and three discount points on the $120,000 loan. What is the total cost of the discount points? $3,600 - The discount points are figured as 1% of the total loan amount ($120,000) not the sales price. Each discount point costs the borrower $1,200. Three discounts points costs the borrower $1,200 x 3 equals for a total of $3,600. A husband has credit scores of 771, 699 and 713. His wife has scores of 812 and 695. What is the representative score a lender will use to qualify the borrowers? 695 - A lender will use the middle of three or the lower of two scores as the representative score. When there is more than one borrower, the representative score from the lowest scoring borrower will be used. A loan with a 2/1 buydown requires 2.625 points to pay for the discount. A loan amount of $157,000 would require how much cash for the buydown? $4,121 - Simply multiply the loan amount by 2.625% to get the total cash required for the buydown ($157,000 x 0.02625 = $4,121). Assuming the borrower has a FICO score of 580 or above, the minimum down payment contribution needed for a home with an FHA-appraised value of $132,000 is $4,620 Math: The minimum down payment on an FHA loan is 3.5% for a borrower with a FICO score of at least 580. ($132,000 X 3.5% = $4,620) Bob wishes to refinance his mortgage and pay off his credit cards without using any personal funds. He owes $75,000 on his first mortgage, $10,000 on his second mortgage, and $3,000 in credit card debt. What would his appraisal value need to be if his closing costs are $4,000 and he qualifies for an 80% LTV? $115,000 - Math: Adding up everything Bob wishes to refinance equals $92,000. The $92,000 divided by the loan-to-value of 80% is $115,000. To check your math, $115,000 x 80% = $92,000. Homeowner Steve can drop his monthly mortgage payment from $1,580 to $1,352 if he refinances to a lower interest rate. How many months would it take him to recover the $2,710 closing costs? 12 - The refi would save Steve $228 a month. It would take 12 months for him to recover the costs ($2,710 / $228 = 11.89 months). If a buyer buys a $100,000 home and gets an $80,000 mortgage loan at an interest rate of 8%, how much is 4 points? $3,200 - A point is 1% of the loan amount, so $80,000 x .01 = $800 per point. Four points is $3,200 (800 x 4).