NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
ARM - answerA variable-rate mortgage, adjustable-rate mortgage (ARM), or
tracker mortgage is a
mortgage loan with the interest rate on the note periodically adjusted based on
an index which
reflects the cost to the lender of borrowi...
NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
ARM - answerA variable-rate mortgage, adjustable-rate mortgage (ARM), or
tracker mortgage is a
mortgage loan with the interest rate on the note periodically adjusted based on
an index which
reflects the cost to the lender of borrowing on the credit markets.
APR - answerThe term annual percentage rate of charge (APR), corresponding
sometimes to a
nominal APR and sometimes to an effective APR (EAPR), is the interest rate for a
whole year
(annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage
loan, credit card,
etc. It is a finance charge expressed as an annual rate. Those terms have formal,
legal definitions in
some countries or legal jurisdictions, but in the United States:
The nominal APR is the simple-interest rate (for a year).
The effective APR is the fee+compound interest rate (calculated across a year).
, NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
APOR - answerThe Average Prime Offer Rate (APOR) is an annual percentage
rate that is based
on average interest rates, fees, and other terms on mortgages offered to highly
qualified
borrowers. ... A subordinate-lien mortgage is generally "higher-priced" if the
APR of this mortgage
is 3.5 percentage points or more higher than the APOR.
ATR - answerThe ATR/QM rule requires you to make a reasonable, good-faith
determination that
a member has the ability to repay a covered mortgage loan before or when you
consummate the
loan. You must consider, at a minimum, eight specific underwriting standards
when making an
ATR determination.
CLTV - answerThe combined loan-to-value (CLTV) ratio is the ratio of all secured
loans on a
, NMLS SAFE EXAM ACRONYMS Questions with
Complete Solutions
property to the value of a property. Lenders use the CLTV ratio to determine a
prospective home
buyer's risk of default when more than one loan is used.
DU - answerDesktop underwriting, or DU, is an automated approval system that
calculates
whether a loan meets Fannie Mae or, in some cases, Federal Housing Authority
(FHA) loan
requirements. A DU evaluates a borrower's risk of delinquency by
comprehensively evaluating
several risk factors.
DTI - answerHere are some guidelines about what is a good debt-to-income
ratio: The "ideal" DTI
ratio is 36% or less. At least, that's the common financial advice of the "28/36
rule." This guideline
suggests keeping total monthly debt costs at or below 36% of your income, and
housing costs at or
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