Mortgage Loan Originator (MLO) Licensing Practice Test

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Prepare for the Mortgage Loan Originator Licensing Exam. Study with flashcards and multiple choice questions, each question offers hints and explanations. Ace your exam with confidence!

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What is a common feature of RHS loans in terms of financing?

They typically require a large down payment.
They offer 100% financing availability.
They have variable interest rates.
They are only available for new construction.

The correct answer is: They offer 100% financing availability.

RHS loans, or Rural Housing Service loans, are designed to promote home ownership in rural areas and are commonly known for offering 100% financing availability. This means borrowers can finance the entire purchase price of the home without needing to make a down payment. This feature is particularly attractive to first-time homebuyers or those who may struggle to save for a substantial down payment, thus encouraging home ownership in eligible rural and suburban areas. The other choices indicate features that do not align with the primary characteristics of RHS loans. For instance, while some loans require down payments, RHS loans are specifically intended to eliminate this barrier by providing the possibility of 100% financing. Details such as interest rates can vary; however, RHS loans can have fixed interest rates, making the option of variable rates irrelevant in this context. Additionally, RHS loans are not limited to new construction; they can also be used for existing homes, further highlighting their flexibility.