Mortgage Agent Level 1 by REMIC | Mock Exams

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Are you preparing for the Mortgage Agent Level 1 exam by REMIC? This mock exams course is designed to give you a competitive edge and confidence on exam day.

Crafted by Mortgage agents from the “How To Become” team, this comprehensive course offers 300 original practice questions. These questions closely mirror the format and challenge of the actual exam. Each question is accompanied by detailed explanations, ensuring you are well-versed in all the chapters.

This course is your final checkpoint before confidently acing the Mortgage Agent Level 1 exam. Trust us, you are in expert hands. With our guidance, success is within reach.

Course Highlights:

• 6 Full-Length HIgh Quality Mock Exams: Reflecting the actual exam’s same weighting.

• Unlimited Attempts: Retake the exams as often as needed to master the material.

• Instructor Support: Receive help and answers to your questions from our instructors anytime.

• In-Depth Explanations: Each question is explained in detail to enhance your understanding. Comprehensive explanations are provided for correct and incorrect options

• Mobile-Friendly: Study anytime, anywhere with the Udemy app.

• 30-Day Money-Back Guarantee: If you’re not satisfied, you can get a full refund.

All questions have been written from scratch!You can see for yourself some of the amazing testimonials from our students who have aced the real exam:

FEATURED REVIEWS:

5 stars: Took the exam last week andPASSED on first try. I have no previous mortgage experience. Studying the REMIC book and taking the mock exams are all I did for preparation. You don’t need anything else to pass the test. Highly recommended. – Nazila A.

You will get SIX high-quality practice exams to be ready for your certification

Quality speaks for itself:

SAMPLE QUESTION #1 (Scenario-based):

Michelle a risk-averse buyer is looking to secure a $400,000 mortgage and is evaluating offers from four different lenders. Here are the options:

• Lender X: 3.9% fixed-rate, no finder’s fee, no loyalty programs.

• Lender Y: 4.1% fixed-rate with a 0.5% finder’s fee, a points program redeemable for travel, and an annual 0.05% rate reduction for each year of on-time payments up to 5 years.

• Lender Z: 4.0% variable-rate with no finder’s fee, an annual cap on rate increases of 0.25%, and a cash-back program offering $2,000 upon signing.

• Lender W: 4.2% fixed-rate with a 1% finder’s fee, comprehensive insurance coverage, and a flexible payment option allowing for lump-sum payments up to 20% of the mortgage per year without penalty.

Michelle values both short-term cost savings and long-term benefits and plans to stay in the house for at least 10 years. What should her mortgage agent recommend?

A. Recommend Lender X for its stability, lower initial rate, and absence of additional fees, prioritizing long-term cost savings.

B. Recommend Lender Y for the points program and potential rate reductions, despite the higher initial rate and finder’s fee.

C. Recommend Lender Z for the cash-back offer and variable rate, assuming rates remain stable, despite potential increases.

D. Recommend Lender W for the comprehensive insurance coverage and flexible payment option, despite the higher rate and finder’s fee.

What’s your guess? Scroll below for the answer

ANSWER:

Correct Option: A.

Detailed Explanation:

Why Option A is Correct:

1. Fixed-Rate Stability:

   • Lender X offers a 3.9% fixed-rate, which means Michelle’s monthly payments will remain consistent throughout the term of the mortgage. This stability is advantageous, especially for a risk-averse buyer who values predictable payments over time.

2. No Additional Fees:

   • There are no finder’s fees or additional costs with Lender X. This eliminates upfront costs and maximizes the initial savings, making it financially advantageous over the life of the mortgage.

3. Long-Term Savings:

   • Over a 10-year period, the lower initial rate will likely result in significant savings compared to the other options, especially when compounded over the term of the mortgage.

Incorrect Options:

Why Option B is Incorrect:

1. Higher Initial Rate:

   • Lender Y offers a higher initial rate of 4.1%, which means higher monthly payments compared to Lender X. Over a 10-year period, this higher rate can result in substantial additional costs.

2. Finder’s Fee:

   • The 0.5% finder’s fee adds to the upfront cost, reducing the initial financial advantage.

3. Rate Reduction:

   • While the annual rate reduction of 0.05% per year up to 5 years might be beneficial, the initial higher rate still impacts long-term savings. The total reduction over 5 years is relatively minor compared to the overall cost of the mortgage at a higher starting rate.

4. Points Program:

   • The travel points program may offer additional value, but it is secondary to the financial cost of the mortgage. For a risk-averse buyer focused on long-term savings, this benefit might not outweigh the higher initial rate and fees.

Why Option C is Incorrect:

1. Variable Rate Risk:

   • Lender Z offers a 4.0% variable rate, which means the rate can fluctuate over time. Even though there is a cap on annual rate increases (0.25%), there is still a risk that rates could increase significantly, leading to higher monthly payments in the future.

2. Cash-Back Program:

   • The $2,000 cash-back offer is attractive but does not compensate for the potential risk of rising interest rates. For a risk-averse buyer who values stability, this variable-rate option might be too uncertain.

3. Long-Term Costs:

   • Over a 10-year period, the variable rate could end up costing more if interest rates rise, despite the initial cash-back incentive.

Why Option D is Incorrect:

1. Highest Rate:

   • Lender W offers the highest fixed-rate at 4.2%. This results in the highest monthly payments compared to the other options, leading to increased overall costs over the life of the mortgage.

2. Finder’s Fee:

   • The 1% finder’s fee adds to the upfront cost, reducing the initial financial advantage.

3. Benefits vs. Cost:

   • While the comprehensive insurance coverage and flexible payment options are valuable, they do not outweigh the cost of the higher interest rate and additional fees. For a buyer focused on cost savings over a long term, these benefits are less impactful compared to the higher overall costs.

SAMPLE QUESTION #2 (Calculation-based):

Maria is looking to purchase a property priced at $500,000 and has provided the following information for her mortgage application:

• Down payment: $35,000

• Annual Income: $96,000

• Income: From a full-time salary with a 4-year history, including overtime and bonus amounts

• Credit score: 730, with no late payments and a 10-year credit history

• The current interest rate with an A lender is 4.0% for a 5-year term and 25-year amortization.

Does Maria qualify for the mortgage based on her information?

A. Yes, their GDS is below the required 32%.

B. Yes, their TDS is below the required 40%.

C. No, you will need to find a private lender with a 7.0% interest rate.

D. No, you will need to ask for additional down payment or additional income to bring the GDS below 32%.

What’s your guess? Scroll below for the answer!

ANSWER:

Correct Option: D.

Detailed Explanation:

To determine if Maria qualifies for the mortgage based on her information, we need to calculate her Gross Debt Service (GDS) ratio and Total Debt Service (TDS) ratio.

Step-by-Step Calculation:

1. Determine Mortgage Amount:

• Property price: $500,000

• Down payment: $35,000

• Mortgage amount = Property price – Down payment

• Mortgage amount = $500,000 – $35,000 = $465,000

2. Monthly Mortgage Payment:

• Mortgage amount: $465,000

• Interest rate: 4.0%

• Amortization period: 25 years

• Monthly mortgage payment calculation using the formula for a fixed-rate mortgage:

M = [P x r x (1+r)^n] / [(1+r)^n-1 ]

   where:

• M is the monthly payment

• P is the loan principal (mortgage amount)

• r is the monthly interest rate (annual rate divided by 12)

• n is the number of payments (amortization period in years multiplied by 12)

• Putting numbers in, The monthly mortgage payment will approximately be $2,452.34.

3. Property Taxes and Heating Costs:

• Estimate annual property taxes at 1% of the property value: $500,000 x 1% = $5,000 per year

• Monthly property taxes: $5,000 / 12 = $416.67

• Estimate monthly heating costs: $100 (common estimate)

4. Calculate GDS Ratio:

• GDS = (Monthly mortgage payment + Property taxes + Heating costs) / Gross monthly income

• Maria’s gross annual income is $96,000 from her salary, including overtime and bonuses.

• Gross monthly income = $96,000 / 12 = $8,000

• GDS = (2,452.34 + 416.67 + 100) / 8,000 ​≈ 0.371 ≈ 37.1%

5. Calculate TDS Ratio:

• Assume no other debt payments.

• TDS = (Monthly mortgage payment + Property taxes + Heating costs + Other debt payments) / Gross monthly income

• TDS=(2,452.34 + 416.67 + 100) / 8,000 ≈0.371 ≈37.1%

Analysis:

• GDS ratio: 37.1% (exceeds the required 32%)

• TDS ratio: 37.1% (below the required 40%)

Maria’s GDS ratio exceeds the required 32%, indicating she does not meet the typical qualification criteria for an A lender. However, her TDS ratio is below 40%, which suggests she could still potentially qualify if other mitigating factors are favorable.

Welcome to the best practice exams to help you prepare for your Mortgage Agent Level 1 exam.

• You can retake the exams as many times as you want

• This is a huge original question bank

• You get support from instructors if you have questions

• Each question has a detailed explanation

• Mobile-compatible with the Udemy app

• 30-days money-back guarantee if you’re not satisfied

We hope that by now you’re convinced!

Happy learning and Best of luck on your Mortgage Agent journey!

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