South Carolina Finance
Practice Questions & Answers (2026)
Finance questions on the South Carolina real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The South Carolina 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. South Carolina 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 SC 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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South Carolina Finance — Practice Questions & Answers
153 questions on Finance from the South Carolina real estate question bank. First 10 are free — sign up to unlock all 153.
Q1. A conventional conforming loan is one that:
Explanation
A conventional conforming loan meets the underwriting guidelines and loan limits set by Fannie Mae and Freddie Mac, making it eligible for purchase in the secondary mortgage market. These loans typically offer competitive rates and terms.
Q2. South Carolina imposes a deed recording fee at the time of real estate transfer. This fee is calculated based on:
Explanation
South Carolina's deed recording fee (deed stamps) is calculated based on the consideration paid — the sale price of the property. The standard rate is $1.85 per $500 (or fraction thereof) of the consideration.
Q3. Which of the following types of mortgages allows a borrower to make interest-only payments for a set period, after which they must pay principal and interest?
Explanation
An interest-only mortgage allows the borrower to pay only interest for a specified period (typically 5–10 years). After the interest-only period ends, the borrower must make fully amortizing payments (principal + interest) on the remaining balance.
Q4. What is the primary purpose of the secondary mortgage market?
Explanation
The secondary mortgage market (dominated by Fannie Mae and Freddie Mac) purchases mortgage loans from primary lenders (banks, credit unions, mortgage companies). This replenishes the lenders' capital, enabling them to make more loans to homebuyers.
Q5. A graduated payment mortgage (GPM) features:
Explanation
A graduated payment mortgage starts with lower monthly payments that gradually increase over a set period (typically 5–10 years), then level off. This structure helps buyers qualify based on lower initial payments, though early payments may not fully cover interest (negative amortization risk).
Q6. In South Carolina, a deed of trust involves which three parties?
Explanation
A deed of trust involves three parties: the borrower (trustor), the lender (beneficiary), and a neutral third party (trustee) who holds legal title until the loan is repaid.
Q7. South Carolina primarily uses deeds of trust for mortgage financing. Which type of foreclosure is associated with deeds of trust?
Explanation
Deeds of trust typically allow non-judicial (power of sale) foreclosure, which is faster and less costly than judicial foreclosure. South Carolina also allows judicial foreclosure on deeds of trust.
Q8. What does PMI (Private Mortgage Insurance) protect in a South Carolina home loan?
Explanation
PMI protects the lender (not the borrower) against losses if the borrower defaults. It is typically required when the down payment is less than 20% of the purchase price.
Q9. A South Carolina property has an appraised value of $350,000. The buyer makes a 10% down payment. What is the loan-to-value (LTV) ratio?
Explanation
LTV = Loan Amount / Appraised Value. Down payment: $350,000 × 10% = $35,000. Loan amount: $350,000 − $35,000 = $315,000. LTV = $315,000 / $350,000 = 90%.
Q10. Which type of mortgage has an interest rate that adjusts periodically based on a market index?
Explanation
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on a specified market index (e.g., SOFR or Treasury index), potentially causing monthly payments to increase or decrease.
Q11. The Truth in Lending Act (TILA) requires lenders to disclose the:
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