Preview Questions Loan Officer | Role Specific Skill

Question 1: When approving a mortgage loan, which of the following factors is most critical in assessing a borrower's risk?

Which action should you take?

Choose only one option

The Debt-to-Income (DTI) ratio

The employment history

The borrower's credit score only

The Loan-to-Value (LTV) Ratio

Question 2: How does a conventional loan differ from an FHA loan?

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A conventional loan is not insured by the government, while an FHA loan is

A conventional loan has stricter eligibility requirements than an FHA loan

FHA loans are designed for high-risk borrowers, while conventional loans are for prime borrowers

A conventional loan requires no down payment, unlike an FHA loan

Question 3: In a consultation for an auto loan, how would you explain the relationship between the loan term and monthly payments to the client?

Which action should you take?

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A longer loan term will lower the monthly payment, but increase the total interest paid over time

A shorter loan term will result in a higher monthly payment, but lower the overall cost of the loan

A shorter loan term results in a higher loan balance, making it more challenging to secure approval

A longer loan term can result in a higher interest rate, affecting the overall cost of the loan

Question 4: How do you use stress testing to assess the risk of a loan application?

Which action should you take?

Choose only one option

Run simulations to determine how the borrower would manage payments under various adverse scenarios

Focus solely on the borrower's current income and expenditure without considering future scenarios

Use historical market data to predict future loan performance without factoring in potential volatility

Look at the client's credit score and assume that past performance is the best predictor of future risk

Question 5: When recommending a personal loan to a client, which factor is most critical to assess before finalizing the consultation?

Which action should you take?

Choose only one option

The purpose of the loan and how it aligns with the client's long-term financial goals

The interest rate type that will benefit the client the most based on their financial standing

The client's credit history and their ability to repay the loan

The loan term the client prefers to maintain their monthly payment level

Question 6: How does the debt-to-income ratio (DTI) influence the creditworthiness assessment of a client?

Which action should you take?

Choose only one option

It impacts the loan term and interest rates offered

It determines the client's credit score

It is not relevant in assessing creditworthiness

It helps determine the client's ability to repay the loan based on their income and existing debt