Massachusetts Finance
Practice Questions & Answers (2026)
Finance questions on the Massachusetts real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The Massachusetts Board of Registration of Real Estate Brokers and Salespersons 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. Massachusetts 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 MA 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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Massachusetts Finance — Practice Questions & Answers
134 questions on Finance from the Massachusetts real estate question bank. First 10 are free — sign up to unlock all 134.
Q1. A Massachusetts buyer obtains a $350,000 mortgage at 6.5% interest. What is the approximate first month's interest payment?
Explanation
Monthly interest = Principal × Annual rate ÷ 12 = $350,000 × 0.065 ÷ 12 = $350,000 × 0.005417 = $1,896 (approximately). This is the interest-only portion of the first payment.
Q2. Which federal law requires lenders to provide borrowers with a Loan Estimate within 3 business days of a loan application?
Explanation
TRID (the TILA-RESPA Integrated Disclosure rule) requires lenders to provide a Loan Estimate within 3 business days of receiving a completed loan application, combining disclosures previously required under TILA and RESPA.
Q3. A conventional mortgage with less than 20% down payment typically requires:
Explanation
When a conventional borrower puts less than 20% down, lenders typically require Private Mortgage Insurance (PMI) to protect against default risk.
Q4. The annual percentage rate (APR) on a mortgage loan differs from the stated interest rate because:
Explanation
APR reflects the true cost of borrowing by including the interest rate plus other costs such as discount points, origination fees, and mortgage broker fees, making it higher than the stated interest rate.
Q5. A buyer's debt-to-income (DTI) ratio is calculated as:
Explanation
The back-end DTI ratio is total monthly debt obligations (housing + all other recurring debts) divided by gross monthly income. Most conventional loans require a DTI at or below 43–45%.
Q6. In Massachusetts, the transfer tax (excise tax) on real estate is paid by:
Explanation
In Massachusetts, the real estate transfer excise tax (deed excise) is customarily paid by the seller. The rate is $4.56 per $1,000 of the sale price (as of current law).
Q7. A Massachusetts property sold for $600,000. Using the state transfer tax rate of $4.56 per $1,000, what is the deed excise tax?
Explanation
Transfer tax = ($600,000 ÷ $1,000) × $4.56 = 600 × $4.56 = $2,736.
Q8. An FHA loan requires a minimum down payment of:
Explanation
FHA loans require a minimum down payment of 3.5% of the purchase price for borrowers with a credit score of 580 or higher.
Q9. A buyer is pre-qualified for a loan. This means the lender has:
Explanation
Pre-qualification is an informal, preliminary assessment of a borrower's ability to obtain a loan based on self-reported information. It is not a loan commitment.
Q10. Which type of mortgage has an interest rate that remains the same for the entire loan term?
Explanation
A fixed-rate mortgage maintains the same interest rate and monthly principal-and-interest payment for the entire loan term, providing payment certainty for the borrower.
Q11. The process of paying off a loan through regular scheduled payments of principal and interest is called:
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