Connecticut Finance
Practice Questions & Answers (2026)
Finance questions on the Connecticut real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The Connecticut 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. Connecticut 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 CT 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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Connecticut Finance — Practice Questions & Answers
131 questions on Finance from the Connecticut real estate question bank. First 10 are free — sign up to unlock all 131.
Q1. A Connecticut buyer is considering an adjustable-rate mortgage (ARM). Which statement is TRUE about ARMs?
Explanation
An ARM has an interest rate that adjusts periodically (e.g., annually) based on a benchmark index (such as SOFR) plus a margin. This can cause monthly payments to increase or decrease over time.
Q2. What is the purpose of private mortgage insurance (PMI)?
Explanation
PMI (private mortgage insurance) protects the lender, not the buyer, against loss if the borrower defaults. It is typically required when the down payment is less than 20% (LTV greater than 80%) on a conventional loan.
Q3. Under the Equal Credit Opportunity Act (ECOA), a lender may NOT deny credit based on:
Explanation
ECOA prohibits discrimination in credit decisions based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. Lenders may still consider financial factors like credit score and debt-to-income ratio.
Q4. A Connecticut property is purchased for $380,000 with a 10% down payment. The buyer obtains a conventional loan for the balance. What is the loan amount?
Explanation
Down payment = $380,000 × 10% = $38,000. Loan amount = $380,000 − $38,000 = $342,000.
Q5. Discount points paid by a borrower at closing are used to:
Explanation
Each discount point equals 1% of the loan amount and is paid to the lender to reduce (buy down) the interest rate. Paying points upfront can reduce the monthly payment and total interest paid over the life of the loan.
Q6. The Truth in Lending Act (TILA) requires lenders to disclose the:
Explanation
TILA requires lenders to disclose the Annual Percentage Rate (APR), finance charges, and other loan terms so borrowers can compare loan costs. The APR includes the interest rate plus fees, expressed as a yearly rate.
Q7. A Connecticut buyer's loan is being processed. The lender orders an appraisal that comes in $15,000 below the purchase price. Which outcome is most likely?
Explanation
Lenders base their loan amount on the lesser of the purchase price or appraised value. If the appraisal is low, the buyer must make up the difference in cash, renegotiate a lower price, or exercise an appraisal contingency to cancel.
Q8. An FHA-insured mortgage requires a minimum down payment of:
Explanation
FHA-insured loans require a minimum down payment of 3.5% for borrowers with a credit score of 580 or higher. This lower down payment makes FHA loans attractive to first-time buyers.
Q9. What is the primary purpose of the Real Estate Settlement Procedures Act (RESPA)?
Explanation
RESPA requires lenders to provide borrowers with disclosures about closing costs and prohibits kickbacks and unearned fees among settlement service providers, protecting consumers in the home purchase process.
Q10. A conventional loan that conforms to Fannie Mae and Freddie Mac guidelines is called a:
Explanation
A conforming loan meets the underwriting standards and loan limits set by Fannie Mae and Freddie Mac, allowing it to be purchased on the secondary market. Loans exceeding the conforming loan limit are called jumbo loans.
Q11. A buyer in Connecticut obtains a 30-year fixed-rate mortgage at 7%. The loan balance is $350,000. What is the approximate monthly interest for the first month?
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