Nationwide Mortgage Licensing System (NMLS) Practice Exam

What financial obligation does NOT appear on the loan estimate?

1. Principal

2. Rate adjustment

3. Funding Fee

4. Taxes

The correct answer is: Funding Fee

The loan estimate is a standardized document designed to provide prospective borrowers with important details about their mortgage, including the expected monthly payment and the overall cost of the loan. It includes essential components like principal, interest rates, and various other financial obligations related to the loan. The funding fee, typically associated with specific loan programs such as VA loans, is not included on the loan estimate. The inclusion of this fee can vary based on the circumstances, such as a borrower's eligibility or loan type. Thus, while the funding fee may be a financial obligation related to obtaining a mortgage, it is not standard information that appears on every loan estimate, making it the correct response in this context. In contrast, principal is inherently tied to the loan amount, and rate adjustments are crucial for understanding potential future payments on adjustable-rate mortgages. Property taxes are also typically estimated as they represent an ongoing financial obligation for homeowners.