Vermont Finance
Practice Questions & Answers (2026)
Finance questions on the Vermont real estate exam cover mortgage types, loan-to-value ratios, qualifying ratios, and federal lending laws. The Vermont 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. Vermont 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 VT 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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Vermont Finance — Practice Questions & Answers
139 questions on Finance from the Vermont real estate question bank. First 10 are free — sign up to unlock all 139.
Q1. A mortgage in Vermont creates which type of interest in the property for the lender?
Explanation
Vermont is a lien theory state where a mortgage gives the lender a lien on the property as security for the debt. The borrower retains title and possession. This differs from title theory states where the lender holds title.
Q2. The purpose of a loan-to-value ratio (LTV) requirement by a lender is to:
Explanation
The LTV ratio protects the lender by ensuring the loan does not exceed a percentage of the property's value. If the borrower defaults, the lender wants sufficient equity in the property to recover the loan through foreclosure.
Q3. Which of the following is an example of seller financing?
Explanation
Seller financing (purchase money mortgage) occurs when the seller acts as the lender and accepts a promissory note secured by a mortgage from the buyer instead of receiving all cash at closing. This is often used when conventional financing is unavailable.
Q4. A wraparound mortgage is a form of seller financing in which:
Explanation
A wraparound mortgage is a junior mortgage that 'wraps around' the existing first mortgage. The seller collects payments from the buyer on the larger wraparound amount and continues paying the original lender. The buyer does not assume the original loan.
Q5. Vermont does NOT have which of the following, making it one of the more borrower-friendly states for mortgage lending?
Explanation
Vermont does not have a statutory right of redemption after foreclosure (unlike some other states), which means once the foreclosure process is complete, the borrower cannot reclaim the property by paying the debt. Vermont uses judicial foreclosure.
Q6. Vermont's Land Gains Tax applies to:
Explanation
Vermont's Land Gains Tax is a state tax on the gain from selling Vermont land held for a short period. The tax rate decreases with the length of ownership and is designed to discourage rapid speculative sales of land.
Q7. In Vermont, which of the following is a common trigger for a prepayment penalty on a mortgage?
Explanation
Prepayment penalties are fees charged when a borrower pays off their loan significantly ahead of schedule. Not all Vermont mortgages have prepayment penalties, but when they exist, they are triggered by early payoff of the outstanding balance.
Q8. The Truth in Lending Act (TILA) requires lenders to disclose which of the following to Vermont mortgage borrowers?
Explanation
TILA requires lenders to clearly disclose the Annual Percentage Rate (APR) and total finance charge so borrowers can compare loan costs across lenders. The APR includes interest rate plus certain fees, giving a more complete picture of loan cost.
Q9. A Vermont first-time homebuyer obtains an FHA loan. Which of the following is a requirement specific to FHA loans?
Explanation
FHA loans require mortgage insurance premiums (MIP) — both an upfront premium and annual premiums — regardless of the loan-to-value ratio. This protects the lender in case of default. FHA loans typically require a minimum 3.5% down payment.
Q10. A Vermont borrower's gross monthly income is $7,500. Their proposed monthly housing costs (principal, interest, taxes, insurance) total $2,100. What is their front-end debt-to-income ratio?
Explanation
Front-end DTI = Housing costs ÷ Gross monthly income = $2,100 ÷ $7,500 = 0.28 = 28%. This is the housing ratio, which many conventional lenders prefer to be 28% or lower.
Q11. The secondary mortgage market allows:
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