SAFE MLO · 20% of the exam
General Mortgage Knowledge practice questions
10 free General Mortgage Knowledge questions for the SAFE Mortgage Loan Originator Test (National Test with Uniform State Content) (SAFE MLO) exam, each with the correct answer and an explanation for every option.
What this domain covers
Mortgage fundamentals: loan types, products, terms and the parties involved.
- Exam weight
- 20%
- On a real exam
- ≈ 24 questions
- In our bank
- 120 questions
Topics that come up most
- Qualified and non-qualified mortgages
- Conventional, FHA, VA and USDA loans
- Fixed and adjustable-rate features
- Mortgage terms and concepts
- Secondary-market basics
How to study it
Learn each loan program's distinguishing features; questions describe a borrower and ask which program fits.
Sample General Mortgage Knowledge questions
Try each one before opening the answer. Original questions written to the official exam objectives.
Question 1
Under a land contract (contract for deed), the buyer usually:
- APays the seller over time; gets the deed when paid in full
- BGets the deed at signing and pays the seller over the following years
- CPays a bank directly
- DNever gets title
Show answer and explanation
Answer: A) Pays the seller over time; gets the deed when paid in full
- ACorrect. The seller keeps legal title until then.
- BIncorrect. Title transfers after payment.
- CIncorrect. The seller finances it.
- DIncorrect. Title transfers after payment.
Question 2
When a mortgage is paid off, the lender records a:
- ADeficiency judgment
- BNew mortgage
- CLis pendens notice with the county court
- DSatisfaction (release) of mortgage
Show answer and explanation
Answer: D) Satisfaction (release) of mortgage
- AIncorrect. That's for unpaid balances.
- BIncorrect. It records a release.
- CIncorrect. That's notice of a lawsuit.
- DCorrect. It clears the lien from the public record.
Question 3
Which statement best describes loan-level price adjustments (LLPAs) on conventional conforming loans?
- ARisk-based pricing charges set by Fannie Mae and Freddie Mac based on factors such as credit score
- BUpfront premiums that FHA charges on every insured loan regardless of the borrower's risk profile
- CPeriodic changes to an adjustable-rate loan's interest rate based on movement in an index
- DInterest rate reductions a borrower buys by paying bona fide discount points at closing
Show answer and explanation
Answer: A) Risk-based pricing charges set by Fannie Mae and Freddie Mac based on factors such as credit score
LLPAs are risk-based pricing charges that Fannie Mae and Freddie Mac apply according to loan and borrower characteristics such as credit score and LTV. Lenders often pass these charges on to borrowers.
- ACorrect. The GSEs use an LLPA matrix for risk-based pricing. The charges vary with loan and borrower characteristics such as credit score and loan-to-value.
- BIncorrect. This describes FHA's upfront mortgage insurance premium, not GSE loan-level price adjustments on conventional loans.
- CIncorrect. This describes ARM rate adjustments. LLPAs are pricing charges that depend on loan and borrower risk characteristics.
- DIncorrect. This describes discount points. An LLPA is a risk-based charge, not a rate buydown chosen by the borrower.
Question 4
What is table funding?
- AClosing in one name, funded by another
- BPaying off a loan early
- CSplitting the closing costs equally
- DFunding a construction project
Show answer and explanation
Answer: A) Closing in one name, funded by another
- ACorrect. In table funding, the loan closes in the broker's name and the lender funds it at the same time.
- BIncorrect. That is prepayment.
- CIncorrect. This is not table funding.
- DIncorrect. That is construction lending.
Question 5
An easement gives someone:
- AOwnership of the whole property
- BThe right to use part of another's land
- CA mortgage lien
- DThe right to sell the property on the owner's behalf
Show answer and explanation
Answer: B) The right to use part of another's land
- AIncorrect. It's a limited use right.
- BCorrect. Utility easements are common.
- CIncorrect. It's a use right.
- DIncorrect. It's a use right.
Question 6
Which description best fits a blanket mortgage?
- AA single loan secured by two or more parcels of real property
- BA loan secured by the home plus personal property such as appliances
- CA short-term loan whose funds are released in stages as building progresses
- DA junior loan that wraps around an existing first mortgage on one property
Show answer and explanation
Answer: A) A single loan secured by two or more parcels of real property
A blanket mortgage secures several parcels under one loan and usually has release clauses so individual parcels can be freed as they are sold. Package, construction and wraparound loans are different structures.
- ACorrect. A blanket mortgage puts one lien on several parcels. Developers often use one with a release clause, so each lot or unit can be released from the lien as its share of the debt is paid.
- BIncorrect. That describes a package mortgage, which adds personal property to the real estate as collateral.
- CIncorrect. That describes a construction loan with a draw schedule.
- DIncorrect. That describes a wraparound mortgage, which covers a single property already carrying a loan.
Question 7
For most FHA forward loans, the upfront mortgage insurance premium is:
- A1.75% of the base loan amount
- B0%
- C10% of the loan
- DA flat $100
Show answer and explanation
Answer: A) 1.75% of the base loan amount
- ACorrect. It's usually financed into the loan.
- BIncorrect. An upfront premium applies.
- CIncorrect. It's 1.75%.
- DIncorrect. It's 1.75%.
Question 8
Ginnie Mae's main role is to:
- AGuarantee securities backed by FHA and VA loans
- BMake loans directly to borrowers in rural areas
- CInsure conventional loans
- DSet conforming loan limits
Show answer and explanation
Answer: A) Guarantee securities backed by FHA and VA loans
- ACorrect. It doesn't buy loans itself.
- BIncorrect. It guarantees MBS.
- CIncorrect. It guarantees MBS of government loans.
- DIncorrect. FHFA does that.
Question 9
Which statement best describes a construction-to-permanent loan?
- AIt funds only the building phase, and the borrower must get a separate mortgage from another lender when the home is done
- BIt funds the building phase through advances, then the same creditor provides permanent financing once the home is done
- CIt funds only the purchase of a vacant lot, and any building costs must be financed later under a separate agreement
- DIt is short-term financing secured by the borrower's current home so they can buy a new home before selling the old one
Show answer and explanation
Answer: B) It funds the building phase through advances, then the same creditor provides permanent financing once the home is done
A construction-to-permanent loan finances building a dwelling, often through multiple advances, and then becomes permanent financing, usually with the same creditor. Under Regulation Z, the construction and permanent phases can be disclosed as one combined transaction or as separate transactions.
- AIncorrect. This describes a standalone construction-only loan. A construction-to-permanent loan carries on into permanent financing, usually with the same creditor.
- BCorrect. Regulation Z commentary describes it as a loan that may pay out in multiple advances to finance building a dwelling, which may then be permanently financed by the same creditor.
- CIncorrect. This describes a lot (land) loan. A construction-to-permanent loan finances the building of the dwelling.
- DIncorrect. This describes a bridge (swing) loan. It is not used to finance building a home.
Question 10
A due-on-sale (alienation) clause lets the lender:
- ARaise the rate monthly if the property value falls
- BDemand full repayment if the property is sold
- CSkip escrow
- DWaive the note
Show answer and explanation
Answer: B) Demand full repayment if the property is sold
- AIncorrect. It applies on transfer.
- BCorrect. It limits assumptions without approval.
- CIncorrect. It applies on transfer.
- DIncorrect. It applies on transfer.
General Mortgage Knowledge: FAQs
How much of the SAFE MLO exam is General Mortgage Knowledge?
General Mortgage Knowledge is 20% of the SAFE MLO exam by the official exam guide's weighting, which on a 120-question form works out to roughly 24 questions. The real exam's exact split varies by form.
What does the General Mortgage Knowledge domain cover?
Mortgage fundamentals: loan types, products, terms and the parties involved.
How should I study General Mortgage Knowledge for SAFE MLO?
Learn each loan program's distinguishing features; questions describe a borrower and ask which program fits.
Where can I practise more General Mortgage Knowledge questions?
This page has 10 free General Mortgage Knowledge questions with answers. The ExamWize SAFE MLO question bank has 120 questions in this domain. Every practice exam result breaks your score down by domain, and Review Mode re-drills the questions you missed.
Get General Mortgage Knowledge exam-ready
The full SAFE MLO bank has 120 General Mortgage Knowledge questions. Timed practice exams match the real exam's length and domain weights, every result shows your score per domain, and Review Mode re-drills the questions you missed.
Not affiliated with NMLS; questions are original, written from the official exam outline, and never copied from the real exam.