North Dakota Finance
Practice Questions & Answers (2026)
Finance questions on the North Dakota real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The North Dakota 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. North Dakota 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 ND 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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North Dakota Finance — Practice Questions & Answers
129 questions on Finance from the North Dakota real estate question bank. First 10 are free — sign up to unlock all 129.
Q1. The USDA Rural Development loan program is designed to help:
Explanation
USDA Rural Development loans are available to buyers in USDA-eligible rural and suburban areas who meet income limits. These loans can offer 100% financing (no down payment) to qualifying borrowers.
Q2. What is amortization in the context of a mortgage loan?
Explanation
Amortization is the process of gradually paying off a mortgage loan through regular payments that cover both principal and interest. Early payments are mostly interest; later payments are mostly principal.
Q3. A North Dakota buyer obtains a VA loan. Which of the following is true about VA loans?
Explanation
VA loans are available to eligible veterans and active-duty service members with no down payment requirement and no private mortgage insurance (PMI), though a VA funding fee typically applies.
Q4. Which of the following best describes a balloon mortgage?
Explanation
A balloon mortgage requires regular monthly payments for a set period, followed by a large lump-sum (balloon) payment of the remaining balance at the end of the term.
Q5. A property sells for $215,000. The buyer puts down 25%. What is the loan amount?
Explanation
Down payment = $215,000 x 25% = $53,750. Loan amount = $215,000 - $53,750 = $161,250.
Q6. The loan-to-value (LTV) ratio is calculated by:
Explanation
LTV = Loan Amount / Appraised Value. A higher LTV indicates more risk for the lender. Many conventional loans require PMI when LTV exceeds 80%.
Q7. Private mortgage insurance (PMI) is typically required when:
Explanation
PMI is required by most conventional lenders when the borrower's down payment is less than 20% (LTV above 80%). It protects the lender if the borrower defaults.
Q8. An adjustable-rate mortgage (ARM) typically starts with a lower interest rate because:
Explanation
ARMs start with a lower initial rate because the borrower assumes the interest rate risk — the rate may increase over time based on a specified index, which shifts risk from the lender to the borrower.
Q9. Which of the following is TRUE about FHA loans?
Explanation
The Federal Housing Administration (FHA) does not lend money directly. It insures approved lenders against loss if a borrower defaults. FHA loans typically require a 3.5% down payment.
Q10. A deed of trust differs from a mortgage in that it involves:
Explanation
A deed of trust involves three parties: the borrower (trustor), the lender (beneficiary), and a neutral trustee who holds legal title until the loan is repaid. A mortgage involves only two parties.
Q11. A conforming loan is a mortgage that:
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