Alaska Finance
Practice Questions & Answers (2026)
Finance questions on the Alaska real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The Alaska Real Estate Commission tests both the mechanics of real estate financing and the regulatory framework — particularly RESPA, TILA (Truth in Lending), and the TRID rules that govern loan disclosures. Alaska candidates often lose points on financing questions because they understand the concept but miss the specific numerical thresholds or disclosure timing requirements that appear on the AK exam. Pay particular attention to ARM vs. fixed-rate mortgage distinctions, the calculation of LTV ratios, and what information must appear in specific disclosure documents.
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Alaska Finance — Practice Questions & Answers
150 questions on Finance from the Alaska real estate question bank. First 10 are free — sign up to unlock all 150.
Q1. Alaska is considered a 'lien theory' state, which means:
Explanation
In a lien theory state like Alaska, the borrower retains legal title to the property, and the mortgage creates a lien on the property as security for the loan. The lender does not hold title; they hold the right to foreclose if the borrower defaults.
Q2. A mortgage that requires equal monthly payments applied first to interest, with the remainder reducing the principal balance, is called a(n):
Explanation
A fully amortizing mortgage has equal monthly payments that cover both interest and principal. Early payments are mostly interest; over time, more of each payment reduces the principal until the loan is fully paid at the end of the term.
Q3. The Truth in Lending Act (TILA) requires lenders to disclose the:
Explanation
TILA requires lenders to disclose the Annual Percentage Rate (APR) and total finance charges, enabling borrowers to compare the true cost of credit from different lenders.
Q4. A buyer in Alaska obtains a conventional loan with an LTV (loan-to-value) ratio of 90%. The lender will most likely require:
Explanation
Conventional lenders typically require private mortgage insurance (PMI) when the LTV exceeds 80%. PMI protects the lender against default risk on high-LTV loans. It is not required on FHA, VA, or USDA loans, which have their own protections.
Q5. An acceleration clause in a mortgage allows the lender to:
Explanation
An acceleration clause gives the lender the right to call the entire outstanding loan balance due and payable immediately if the borrower defaults on the terms of the loan agreement.
Q6. A VA loan in Alaska is guaranteed by:
Explanation
VA loans are guaranteed by the U.S. Department of Veterans Affairs. They are available to eligible veterans, active-duty service members, and surviving spouses, and typically require no down payment and no PMI.
Q7. The discount points paid by a borrower at closing primarily serve to:
Explanation
Discount points are prepaid interest paid to the lender at closing in exchange for a lower interest rate. One point equals 1% of the loan amount. Paying points makes sense when the borrower plans to keep the loan long enough to recoup the upfront cost.
Q8. A due-on-sale clause in a mortgage means:
Explanation
A due-on-sale clause (also called an alienation clause) requires the borrower to pay off the mortgage in full when the property is sold or transferred. This prevents buyers from assuming loans without lender approval.
Q9. What is the primary purpose of the Real Estate Settlement Procedures Act (RESPA)?
Explanation
RESPA requires lenders to provide borrowers with disclosures about settlement costs and prohibits kickbacks, referral fees, and other arrangements that could inflate the cost of settlement services. It applies to most residential mortgage loans.
Q10. A buyer assumes the seller's existing mortgage. The buyer is now primarily liable for the debt, and if the lender releases the seller from the original obligation, this is called:
Explanation
Novation occurs when the lender releases the original borrower (seller) from liability and substitutes the new buyer as the party responsible for the debt. Without novation, the seller remains secondarily liable even after the buyer assumes the mortgage.
Q11. Alaska is classified as a lien theory state. This means that when a borrower obtains a mortgage:
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