United States
Hong KongThe questions that trip people up
Rescission on a purchase, the lesser of price and value, which changes restart the three-day wait, net against gross income, the FHA and conventional PMI rules, ARM caps, and the permanent felony bar.
Seven traps that recur, each resting on a distinction that feels smaller than it is.
One: rescission on a purchase
There is none. The right of rescission applies to a refinance secured by a principal dwelling, not to buying a home.
Two: the lesser of price and value
Loan-to-value uses the lower of purchase price and appraised value. If a question supplies both, that is why.
Three: what restarts the three-day wait
An APR change beyond tolerance, a product change, or an added prepayment penalty. Only those three. Every other change requires a corrected disclosure without restarting the clock.
Four: gross, not net
Every ratio uses gross monthly income. The figure produced by take-home pay will be sitting among the options.
Five: FHA and the 78 percent rule
Automatic termination at 78 percent is a Homeowners Protection Act rule about private mortgage insurance on conventional loans. FHA annual premiums often run for the life of the loan.
Six: ARM caps
Index plus margin gives the fully indexed rate. Then the cap limits the movement. Questions are built so the two differ, and the fully indexed figure is the distractor.
Seven: the permanent felony bar
A felony involving fraud, dishonesty, breach of trust or money laundering bars licensure permanently. Not seven years. Candidates assume every bar eventually lapses.
Each is a place where a nearly-right answer exists and is offered to you. Knowing the rule is not enough; you have to notice which of two similar rules the scenario is about.
Common questions
Does rescission apply to a home purchase?
No. It applies to a refinance secured by the borrower's principal dwelling.
Which value is used for loan-to-value?
The lesser of the purchase price and the appraised value.
What restarts the three-day closing wait?
An APR change beyond tolerance, a change of loan product, or the addition of a prepayment penalty.
Does FHA mortgage insurance cancel at 78 percent?
No. That rule applies to private mortgage insurance on conventional loans.
Is the felony bar always seven years?
No. A felony involving fraud, dishonesty, breach of trust or money laundering bars licensure permanently.