Relax! You will never see a question like this on the NMLS exam:
For what value of k will the two equations 2x + 4 = 4(x - 2) and -x + k = 2x - 1 have the same solution?
A) 6
B) 2
C) 17
D) -1
E) 20
But you might see a question like this:
A loan applicant wants to refinance his home. The house appraised at $261,000. The payoff for his existing loan is $179,824.16. His DTI is 36%, his monthly PITI can’t be over $1123.92, and he qualifies for a 6.125% interest rate. Closing costs for the loan will be $5,112.88. What will be the LTV for this loan?
At the outset this might look difficult, but if you break down the data you’ll see much of it is not even needed to figure the answer. The loan amount is 179,824.16 + 5,112.88 = $184,937.04, which represents 70.85% of the 261,000. value. So the LTV is 71%.
The DTI, PITI and interest rate have nothing to do with LTV, so don’t let these factors throw you off.
To answer this type of question, you should determine from carefully reading it what it is actually asking. Then choose which of its facts you need to consider. Understanding the underlying concepts and terminology involved to determine the answer is more important than being able to do the relatively simple math.
For math calculations all you will need (and are allowed to use) is a simple calculator which is supplied for you at the test center. The calculator will only do addition, subtraction, multiplication and division. There will be no questions on the NMLS exam (or in our course!) requiring you to calculate compound interest rates or to do other complicated computations.
By the way, the first question I illustrated is an actual question on a current high school SAT practice exam! And, I have no idea what the answer is...