Hawaii Finance
Practice Questions & Answers (2026)
Finance questions on the Hawaii real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The Hawaii Real Estate Branch 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. Hawaii 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 HI 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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Hawaii Finance — Practice Questions & Answers
162 questions on Finance from the Hawaii real estate question bank. First 10 are free — sign up to unlock all 162.
Q1. In a mortgage, who is the mortgagor?
Explanation
The mortgagor is the borrower who pledges real property as collateral to secure a loan. The mortgagee is the lender. A helpful memory device: the mortgagOR gives the mortgage (as security), the mortgagEE receives it.
Q2. The Truth in Lending Act (TILA) requires lenders to disclose the cost of credit as the:
Explanation
TILA (Regulation Z) requires lenders to disclose the Annual Percentage Rate (APR), which includes the interest rate plus fees and other costs, providing borrowers with a true cost of credit comparison.
Q3. A loan with a fixed payment schedule where each payment covers both interest and principal is called a(n):
Explanation
A fully amortizing loan has scheduled payments that cover both interest and principal, with the loan balance reaching zero at the end of the loan term. Each payment reduces the outstanding principal.
Q4. An FHA loan differs from a conventional loan primarily because:
Explanation
FHA loans are insured by the Federal Housing Administration, which protects lenders against borrower default. This insurance allows lenders to offer loans to borrowers with lower down payments and credit scores than conventional loans typically require.
Q5. Which federal law prohibits lenders from discriminating in lending based on the racial composition of a neighborhood?
Explanation
The Community Reinvestment Act (CRA) requires federally insured depository institutions to meet the credit needs of the communities in which they operate, combating the practice of redlining — refusing to lend in certain neighborhoods based on racial composition.
Q6. In Hawaii, which type of mortgage instrument transfers legal title to the lender until the loan is repaid?
Explanation
A deed of trust transfers legal (bare) title to a neutral third-party trustee as security for the loan. Hawaii may use either mortgage or deed of trust instruments.
Q7. The Truth in Lending Act (TILA) requires lenders to disclose the loan's cost as the:
Explanation
TILA requires disclosure of the Annual Percentage Rate (APR), which includes the interest rate plus other loan costs, giving borrowers a true cost of credit for comparison.
Q8. In a typical Hawaii residential transaction, which document creates the borrower's personal obligation to repay the loan?
Explanation
The promissory note is the borrower's written promise to repay the loan under stated terms. The mortgage or deed of trust is the security instrument pledging the property as collateral.
Q9. A Hawaii buyer obtains a loan where the interest rate is fixed for the first 5 years then adjusts annually. This is:
Explanation
A 5/1 ARM has a fixed interest rate for the first 5 years and then adjusts annually based on a benchmark index. This is a specific type of adjustable-rate mortgage.
Q10. Which federal law prohibits discrimination in the granting of credit based on race, color, national origin, sex, religion, marital status, age, or receipt of public assistance?
Explanation
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction based on race, color, national origin, religion, sex, marital status, age, or receipt of public assistance.
Q11. Under RESPA, a lender must provide a borrower with the Loan Estimate within how many business days of receiving a completed loan application?
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