FinanceIntermediateArizona Exam

A 'VA loan' benefit for eligible veterans in Arizona includes which significant advantage?

AA reduced property tax assessment on the veteran's primary residence, since Arizona provides VA borrowers with an increased homestead exemption of up to $5,000 in assessed value

BThe ability to purchase a primary residence with no down payment and no private mortgage insurance (PMI) requirementCorrect

CAn exemption from Arizona's anti-deficiency statutes, so that the lender cannot pursue a deficiency judgment if the home is sold at foreclosure for less than the loan balance

DA guaranteed below-market interest rate set by the VA and adjusted quarterly, which is always at least 0.5% below the prevailing conventional 30-year fixed mortgage rate

Why The ability to purchase a primary residence with no down payment and no private mortgage insurance (PMI) requirement Is Correct

Answer B: The ability to purchase a primary residence with no down payment and no private mortgage insurance (PMI) requirement

VA loans allow eligible veterans, active-duty service members, and surviving spouses to purchase primary residences with no down payment and no PMI. The VA guarantees a portion of the loan, allowing lenders to offer favorable terms without the down payment and PMI requirements of conventional loans.

Exam Tip: Finance

Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.

Key Finance Terms in This Question

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.

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Key Terms to Know

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.

Math Concepts

Interest Rate Down Payment

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