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Florida Real Estate Exam Practice Questions: Finance and Lending
5 practice questions on finance and lending for the Florida real estate sales associate exam. Each one has the correct answer, a full explanation of why the other options are wrong, and the statute it comes from.
What this topic covers
Loans, mortgages, underwriting, and foreclosure. Questions here test how loans and mortgages work, how lenders underwrite them, and what happens in foreclosure.
Sources these questions cite include: § 697.02, Fla. Stat.; § 701.04, Fla. Stat.; § 45.0315, Fla. Stat.; 12 U.S.C. § 2607; 12 U.S.C. § 1701j; 12 U.S.C. § 4901.
Question 1
A lender charges two discount points on a $250,000 loan. How much does the borrower pay for the points?
- A. $500
- B. $2,500
- C. $5,000
- D. $50,000
Show the answer and explanation
Correct answer: C.
One discount point equals 1 percent of the loan amount. Two points on $250,000 = 0.02 × $250,000 = $5,000. Points are prepaid interest paid to lower the interest rate. A is wrong because this treats each point as 0.1 percent of the loan. B is wrong because this counts only one point. D is wrong because this treats each point as 10 percent of the loan.
Source: 12 C.F.R. § 1026.4
Question 2
A buyer's loan is scheduled to be consummated (closed) on Monday, November 2, 2026. The lender hand-delivers the Closing Disclosure to the buyer. No federal holidays fall in the period. Using the business day definition that applies to the Closing Disclosure waiting period, what is the latest date the buyer may receive the Closing Disclosure?
- A. Friday, October 30, 2026.
- B. Wednesday, October 28, 2026.
- C. Thursday, October 29, 2026.
- D. Saturday, October 31, 2026.
Show the answer and explanation
Correct answer: C.
The consumer must receive the Closing Disclosure no later than three business days before consummation (§ 1026.19(f)(1)(ii)(A)). For this provision, business day means all calendar days except Sundays and legal public holidays (§ 1026.2(a)(6)), so Saturdays count. Counting back from Monday, November 2: Saturday, October 31 (1), Friday, October 30 (2), Thursday, October 29 (3). The latest date is Thursday, October 29. A counts only two days. B uses the general business day definition that excludes weekends, which does not govern the Closing Disclosure. D is wrong because a Closing Disclosure received on October 31 would give only one business day before closing.
Source: 12 C.F.R. § 1026.19(f)(1)(ii)(A); 12 C.F.R. § 1026.2(a)(6)
Question 3
Which statement about VA home loans is correct?
- A. The VA insures the lender against loss and requires the borrower to pay monthly private mortgage insurance on the loan.
- B. The Department of Veterans Affairs guarantees part of the loan made by a private lender, and a down payment is often not required.
- C. The VA makes the loan directly to every eligible veteran and holds the loan until the borrower has repaid it.
- D. The borrower must put down 20 percent of the price or the VA will deny the loan, because it never guarantees low-down-payment loans.
Show the answer and explanation
Correct answer: B.
A VA loan is a guaranteed loan. Eligible veterans, service members, and some surviving spouses can borrow with little or no down payment and without monthly PMI, and the VA charges a funding fee in most cases. A is wrong because a VA loan does not require monthly mortgage insurance, and it is guaranteed, not insured. C is wrong because the VA guarantees loans made by private lenders. D is wrong because no minimum down payment is required for most eligible borrowers.
Source: 38 U.S.C. ch. 37
Question 4
Under the federal Homeowners Protection Act, when must a lender automatically terminate private mortgage insurance on a conventional home loan if the borrower is current on payments?
- A. When the loan balance is scheduled to reach 78 percent of the home's original value
- B. When the loan balance reaches 90 percent of the original value of the home, which is the point of automatic termination
- C. As soon as the borrower has made the first twelve monthly payments, which is the point of automatic termination
- D. Never, because private mortgage insurance continues for the entire life of every conventional loan on a home
Show the answer and explanation
Correct answer: A.
The borrower may request cancellation when the balance reaches 80 percent of the original value if the borrower meets the conditions. The lender must terminate PMI automatically at 78 percent if the borrower is current. B is wrong because the automatic termination point is 78 percent. C is wrong because the law ties termination to the loan balance, not to the number of payments. D is wrong because the law requires cancellation or termination in the stated circumstances.
Source: 12 U.S.C. §§ 4901-4910
Question 5
Buyer Kim purchases a home 'subject to' the seller's existing mortgage, without the lender's agreement to release the seller. If Kim stops paying, who remains personally liable on the note?
- A. Only Kim, because Kim is the new owner and took over the payments, so the seller was released from the loan at the sale.
- B. Nobody, because the loan ended at the sale, and the lender may look only to the property itself if payments stop.
- C. The original borrower (the seller), because Kim did not formally assume the loan and the lender did not release the seller
- D. Only the lender, which must absorb the loss, because the seller transferred the debt along with the property to Kim.
Show the answer and explanation
Correct answer: C.
When a buyer takes title subject to a mortgage, the original borrower stays liable. When a buyer assumes the loan, the buyer becomes personally liable too, and the seller remains liable unless the lender grants a release (novation). A is wrong because taking title subject to a mortgage does not make the buyer personally liable on the note. B is wrong because the loan stays in force. D is wrong because the original borrower remains liable on the note.
Source: Common law
Want more on this topic?
The full Prep475 kit has 25 questions on finance and lending, all with the same statute-cited explanations, plus a timed 100-question exam simulation.
Independent study aid, not legal advice. Not affiliated with or endorsed by the Florida Real Estate Commission, the DBPR, or Pearson VUE. Questions are original practice questions, not actual exam questions. Statutes, rules, and exam details change; always confirm against current Florida law and your pre-licensing course materials.
Last reviewed October 20, 2026.