South Dakota Finance
Practice Questions & Answers (2026)
Finance questions on the South Dakota real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The South 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. South 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 SD 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 Dakota Finance — Practice Questions & Answers
144 questions on Finance from the South Dakota real estate question bank. First 10 are free — sign up to unlock all 144.
Q1. Which type of mortgage loan is guaranteed by the Department of Veterans Affairs?
Explanation
The VA loan is guaranteed by the U.S. Department of Veterans Affairs and is available to eligible veterans, active-duty service members, and surviving spouses. VA loans often require no down payment.
Q2. In a fully amortized loan, the monthly payment:
Explanation
In a fully amortized loan, the monthly payment amount remains constant throughout the loan term. However, the portion allocated to interest decreases over time while the portion applied to principal increases.
Q3. The Truth in Lending Act (TILA) requires lenders to disclose the:
Explanation
TILA requires lenders to disclose the Annual Percentage Rate (APR) and other loan terms so borrowers can compare the true cost of credit. The APR includes the interest rate plus fees and other costs.
Q4. A loan-to-value ratio (LTV) of 80% means that the borrower is financing:
Explanation
An LTV of 80% means the loan amount equals 80% of the property's value or purchase price. The borrower is making a 20% down payment. Lenders often require private mortgage insurance (PMI) when LTV exceeds 80%.
Q5. Which of the following best describes a balloon mortgage?
Explanation
A balloon mortgage has regular periodic payments, but at the end of the loan term, the remaining balance is due in a single large (balloon) payment. These loans often have lower initial interest rates.
Q6. South Dakota uses which foreclosure method as its primary process?
Explanation
South Dakota recognizes deeds of trust, allowing non-judicial (trustee's sale) foreclosure. This process is typically faster than judicial foreclosure and does not require court action.
Q7. In a South Dakota deed of trust, who holds legal title to the property during the loan period?
Explanation
In a deed of trust, the trustee holds legal title to the property as security for the loan. The trustor (borrower) retains equitable title and possession.
Q8. What is the South Dakota redemption period after a mortgage foreclosure sale?
Explanation
South Dakota provides a 6-month statutory redemption period after a mortgage foreclosure sale during which the borrower may redeem the property by paying the foreclosure sale price plus interest.
Q9. South Dakota charges which of the following state-level taxes on real estate transfers?
Explanation
South Dakota does not impose a state real estate transfer tax. This is one of several tax advantages of buying and selling property in South Dakota.
Q10. In South Dakota, what does 'loan-to-value ratio' (LTV) measure?
Explanation
LTV = Loan Amount ÷ Appraised Value. Lenders use this ratio to assess risk; a lower LTV typically results in better loan terms for the borrower.
Q11. Which loan type is commonly used for rural property purchases in South Dakota and is backed by the U.S. Department of Agriculture?
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