Quiz #3 - Assets

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| By Rduttonnam
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Rduttonnam
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Quizzes Created: 2 | Total Attempts: 528
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  • 1/10 Questions

    Lenders must verify the borrower has sufficient assets for down payment and closing costs?

    • True
    • False
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About This Quiz

Quiz #3 - Assets evaluates understanding of asset management in mortgage processes, focusing on verification of borrower's assets for down payments and closing costs, and rules about retirement asset valuation.

Asset Management Quizzes & Trivia

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  • 2. 

    A borrower may choose to use his credit card to pay closing costs?

    • True

    • False

    Correct Answer
    A. False
    Explanation
    A borrower typically cannot use a credit card to pay closing costs. Closing costs are typically paid using certified funds such as a cashier's check or wire transfer. Credit cards are not considered a secure form of payment for large transactions like closing costs, as they can carry high interest rates and may not provide the necessary funds to cover the costs. Therefore, it is generally not advisable or feasible for a borrower to use a credit card to pay closing costs.

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  • 3. 

    What percentage of the total value of a retirement asset may be used?

    • 30%

    • 65%

    • 60%

    Correct Answer
    A. 60%
    Explanation
    A retirement asset refers to the funds or investments set aside for retirement. The question is asking about the percentage of the total value of this asset that can be utilized. The correct answer is 60%, indicating that individuals can use up to 60% of the total value of their retirement asset. This suggests that there are restrictions on how much can be withdrawn or utilized, likely to ensure that individuals have enough funds for their retirement years.

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  • 4. 

    Who can provide a gift for the borrower for funds to close?

    • Seller

    • Parents and/or children

    • Real Estate Agents

    • Loan Officer

    Correct Answer
    A. Parents and/or children
    Explanation
    Parents and/or children can provide a gift for the borrower to help fund the closing costs. This is a common practice in real estate transactions where the buyer may need additional funds to cover the expenses associated with closing the deal. The gift can be given by the borrower's parents or children and is typically used to cover costs such as down payment, appraisal fees, or attorney fees. This allows the borrower to complete the purchase without having to rely solely on their own financial resources.

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  • 5. 

    If a seller wishes to contribute to the borrower's funds to close, he may pay...

    • Closing Costs

    • Down Payment

    • Both

    Correct Answer
    A. Closing Costs
    Explanation
    If a seller wishes to contribute to the borrower's funds to close, they may pay the closing costs. Closing costs are the fees and expenses that borrowers pay when purchasing a property, such as appraisal fees, title insurance, and attorney fees. By paying the closing costs, the seller is helping the borrower cover these expenses and facilitating the closing of the transaction. The down payment, on the other hand, is the initial payment made by the borrower towards the purchase price of the property and is typically not paid by the seller.

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  • 6. 

    EMD or earnest money deposit is equal to the borrower's down payment

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The explanation for the answer is that EMD or earnest money deposit is not equal to the borrower's down payment. EMD is a deposit made by the buyer to show their serious intent to purchase a property, while the down payment is the initial payment made by the buyer towards the purchase price of the property. These two terms are different and serve different purposes in a real estate transaction.

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  • 7. 

    Asset statements must cover a period of...

    • 60 days

    • 45 days

    • 30 days

    • 120 days

    Correct Answer
    A. 30 days
    Explanation
    Asset statements must cover a period of 30 days because this duration allows for a comprehensive overview of an individual's financial assets within a reasonable timeframe. It provides enough information to assess their current financial situation and make informed decisions. A shorter period may not capture significant changes or fluctuations in assets, while a longer period may become outdated or less relevant. Therefore, a 30-day period strikes a balance between providing relevant information and keeping the asset statement up to date.

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  • 8. 

    If a borrower does not have enough liquid assets to close, they may borrow them from a close friend or relative?

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Borrowing funds from a close friend or relative to cover closing costs is not a recommended practice in the lending industry. Lenders typically require borrowers to have sufficient liquid assets of their own to cover these costs. Borrowing from a friend or relative may raise concerns about the borrower's financial stability and ability to repay the loan. It is advisable for borrowers to have their own funds available or explore other financing options to cover closing costs.

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  • 9. 

    Large deposits only require a written explanation from the borrower?

    • True

    • False

    Correct Answer
    A. False
    Explanation
    Large deposits do not only require a written explanation from the borrower. In the mortgage lending process, large deposits are typically subject to additional scrutiny and verification. Lenders may require documentation such as bank statements, gift letters, or other proof of the source of the deposit. This is done to ensure that the funds are legitimate and not a loan that could potentially affect the borrower's ability to repay the mortgage. Therefore, a written explanation alone is not sufficient for large deposits.

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  • 10. 

    W2s are required to verify all assets on an annual basis?

    • True

    • False

    Correct Answer
    A. False
    Explanation
    W2s are not required to verify all assets on an annual basis. W2 forms are used for reporting an employee's wages and taxes withheld from their paycheck. They are not directly related to asset verification. Asset verification typically involves physical counting or auditing of assets to ensure their accuracy and existence. Therefore, the statement is false.

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  • Current Version
  • Mar 19, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 14, 2012
    Quiz Created by
    Rduttonnam
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