How To Study And Pass The NMLS Exam The First Time


How To Study And Pass The NMLS Exam The First Time

This BLOG On How To Study And Pass The NMLS Exam The First Time Was Written By Matt Herbolich MBA JD LLM CMLP NMLS 1649154

After registering for a profile on the NMLS (Nationwide Multistate Licensing System & Registry) and completing a 20 hour approved course, the aspiring Mortgage Broker will now be tasked with passing the federal loan originators test.

  • This test must be passed before one can proceed on the way to becoming a loan originator.
  • This test is approximately 115 questions and the test taker will have 180 minutes to complete.
  • Passing score is a 75% or above.
  • According to the NMLS (Nationwide Mortgage Licensing System) website, from July 1, 2015 to June 31, 2017 a total or 87,554 tests were taken, and 48,657 scored a passing grade of 75% or better.
  • Only 60% of those who sit for the NMLS Mortgage License Originator (MLO) test pass on their first try.
  • Even more daunting is the fact that less than half (only 43%) pass it on their subsequent attempts.
  • The overall average (when combining first time and repeat attempts) creeps up to about 55%.
  • I figured that not everyone passes the NMLS test, but I was surprised to see that the low pass rate reflected what I had thought something like the bar exam or medical boards would be (a little over half passing).
  • So, despite what one may have heard, it’s not an “easy” test.
  • The numbers mentioned above are evidence that failure is common.
  • However, don’t let the numbers scare you, with the right preparation and test taking techniques, I think passing is attainable for pretty much anybody.
  • I didn’t do that well on the first handful of NMLS practice tests that I took.
  • I think my score hovered around 50%. I was unpleasantly surprised because I had spent a decade in the title industry closing loans for mortgage brokers and thought I was well versed in mortgage vocabulary and regulations.
  • I thought I just needed to re-acclimate and fine tune my comprehension of mortgage origination and I would be fine.
  • I was mistaken.
  • I figured out quickly that the NMLS test was not going to be the cakewalk that I had hoped it would be.
  • I needed to buckle down and get a daily plan in place.
  • After thinking about this strategically, I decided my strategy was going to be fairly simple.
  • I was going to take an incredible amount of practice questions, and reviewing every question I got wrong to burn into my brain what the proper answer was if I saw it in the future.
  • After a couple days of this strategy my cumulative percentage had climbed to 77% and suddenly I was in a “passing” position.
  • I was pleased with my progress but still not satisfied, as I had no desire to take the test more than one time.
  • I wanted to start originating loans and making money! After taking more and more practice tests, I was finally “acing” everything that my test preparation company Kaplan Mortgage threw at me.
  • I ended up passing with the test on my first time, although I didn’t “ace” it. So, my methods worked.
  • However, in hindsight, my methods were more time consuming (and too stressful) than they needed to be, and I’m fairly certain there are better ways to achieve a passing score the first time than the methods I implemented.

How To Study And Pass The NMLS Exam The First Time: Study Materials

Rich Leffler, writing for the acclaimed Scotsman Guide, offers various tips for passing the test on your first try. Many of these tips rang true from my experience.

  • I will put my own personal spin on Rich Leffler’s tips as it relates to my recent NMLS test experience.
  • The goal of this blog is to help the aspiring mortgage broker in implementing a time efficient and winning strategy for first time passing.
  • Go to actual classroom instead of Online: I did not do this. I opted for an online course I could take in my sweat pants.
  • I think I would have been better served and saved time had I taken a live class.
  • I understand, as a professional, one’s time is valuable.
  • Someone may wonder why they should “waste” two or three days sitting in a classroom when they can take the class online and simultaneously manage their business.
  • Think about it: What is the likelihood that you’ll allow distractions such as the phone, e-mails or visitors while you “watch” the webinar or take the online class?
  • In which setting do you think one would be less distracted?
  • Sitting at one’s desk or in a classroom where one is compelled to pay attention?
  • Taking a live course taught by a skilled instructor with whom one can interact captures a person’s attention far longer than any other format would.
  • And captured attention means greater levels of understanding and retention.
  • By taking a live class, the inconvenience of missing work is clearly justified by passing the exam.

Rest Up & Take Your Time

Although it may sound like common sense, the reader may be surprised how many people do not take the test seriously enough to get ample rest.

  • Come to the test well rested, and plan to use the time allotted.
  • It is commonplace to hear about those who finished the exam in an hour.
  • That’s fine — and this might be the case for you as well.
  • Those sitting for the NMLS test are afforded three hours, so my advice is to take the three hours.
  • Consider getting out any earlier a bonus.
  • I took close to two hours, and went back over each question at least once and some questions more than that.
  • So the test taker should have plenty of time to go over each question more than once. So use the time to your advantage.

Using Tutorials On How To Study And Pass The NMLS Exam The First Time

Use your tutorial. This test is too important to miss a question or two because the test taker didn’t know how to access the online calculator or how to go back to review a question.

  • If there is a tutorial, take the time to go through it.
  • There was a tutorial for me when I took the test, and I ignored the urge to rush past it and get to the test. I advise the test taker to do the same. Don’t be in a rush to start.
  • The tutorials are there for the test taker’s advantage, so use them!

How To Study And Pass The NMLS Exam The First Time: Taking The Multiple Choice NMLS Exam

Read each question at minimum twice. The NMLS test questions are frequently tricky, and the test taker’s eyes and mind often work at different speeds. Imagine the following example question provided by Rich Leffler, “”At what equity position is mortgage insurance automatically removed?”

  • 80 percent
  • 78 percent
  • 22 percent
  • 20 percent

This is question is tricky— the test taker remembers their instructor emphasizing that once the loan-to-value ratio (LTV) reaches 78 percent, mortgage insurance is automatically removed.

So the test taker chooses “B,” and guess what? They are wrong . The question didn’t ask about LTV. It asked about equity position. Upon a careful second read, the correct answer was clearly “C,” but by reading it quickly, the test taker picked the wrong answer.

How To Choose The Right Answer

Remember, no matter how simple the questions seem, be sure to read each one at least twice.

Answer each question immediately. To register the answer, the test taker has two choices: “Confirm” or

  • “Confirm and Review.”
  • If the test taker answers “confirm and review,” they move to the next question while retaining the opportunity to return to it once they’ve answered the last one.
  • A good tip is to answer the questions that the test taker is certain of with a “confirm” instead of a “confirm and review”
  • That way, when they go back through the test, the questions they are most certain of will be skipped over, leaving you with much needed time to spend on those questions the test taker is unsure of the answer.

One important note:

  • If you leave an answer under the “confirm and review” status, it won’t be counted.
  • Be careful of negatives.
  • The test taker is almost certain to find wording such as “everything but,” “everything other than,” “except for” and “not” in questions.
  • Be careful — overlooking one “not” might cause the test taker to choose a wrong answer and end up with a failing grade.
  • Read each question carefully.

Answer Every Question

Answer every question.

  • A blank answer is a wrong answer.
  • It seems like common sense but be sure to go over every question to make sure you are at least guessing on each question (for a minimum 25% chance to be correct).
  • If the test taker has no clue on 4 questions, and answers each one ‘C” they will most likely get one and perhaps even two of them correct.

If it’s not there, don’t add it. No matter how tempting it might be, do not add information that’s not there to a question. For example, as Rich Leffler points out, “if a question describes parties engaged in an activity that would violate the Real Estate Settlement Procedures Act (RESPA), such as someone offering someone else an item of value, and asks who’s in violation, don’t add more to the question. For instance, if the question does not state that the other party accepted the offer, the only violator is the party who offered it.”

Choosing The Best Multiple Choice Answer

Never assume questions are incomplete & choose the best-possible answer. If a question seems incomplete, don’t panic.

  • Remember to answer the “best” choice not the absolute “perfect” choice.
  • The test taker should always use their best judgment and work with the information given.
  • The answer is obviously there, although sometimes it might be hard to see.

How To Study And Pass The NMLS EXAM The First Time

Know Regulations & Their Acronyms I’m glad I spoke to an old client of mine from my title insurance days who told me “Know the regulations and their acronyms!”

  • I might not have paid as close attention to them, and they were all over the exam.
  • It’s critical that you know the regulations. Several regulations are described by letters — e.g., the Equal Credit Opportunity Act is Regulation B, the Truth in Lending Act (TILA) is Regulation Z, RESPA is Regulation X, and so on and so forth.

For example, the test taker might see a question such as, “According to Regulation Z, which of the following is prohibited?”

  • All the answers will constitute regulatory violations, but only one will violate TILA. So obviously, it’s helpful to know that Regulation Z is TILA.
  • Study!!!
  • Whether the test taker has worked in the mortgage industry for one month or for 20 years and one month, if they want to pass the NMLS exam, they must study.
  • The test taker may be a seasoned professional, but that doesn’t mean they know that the U.S.
  • Department of Housing and Urban Development regulates RESPA or that loans closed on or after July 29, 1999, require numerous disclosures in accordance with the Homeowners Protection Act.
  • Lastly, I cannot over stress the importance of taking copious amounts of practice questions.
  • The more questions the merrier.
  • Many of the questions will be duplicated in various ways on the actual exam, and you will be familiarized with a lot of the content by answering a lot of practice questions.
  • This will serve you well come test time.


About The Author Of How To Study And Pass The NMLS Exam The First Time: Matt Herbolich MBA JD LLM CMLP NMLS 1649154

Matt Herbolich MBA JD LLM CMLP NMLS 1649154 is the author of How To Study And Pass The NMLS Exam The First Time. Matt Herbolich NMLS 1649154 is a senior writer for Gustan Cho Associates Mortgage & Real Estate Information Resource Center. Matt has extensive experience in lending, real estate, and title. Matt Herbolich hold two law degrees, Juris Doctorate and Masters of Laws and also has his Master’s Of Business Administration (MBA) degree. His education in law, business, and experience not just in lending and real estate, but also being a real estate investor himself has triggered Matt’s interest in becoming a loan officer. Matt Herbolich’s passion in helping people who have a hard time getting qualified for home loans made Matt changed careers in mortgage lending. Matt Herbolich joined forces with Gustan Cho of The Gustan Cho Team at USA Mortgage and is helping the group expand nationally. Matt Herbolich plans on expanding his talents into the mortgage business and is part of The Gustan Cho Team at USA Mortgage national expansion team. Looking forward to Matthew Herbolich future blogs. Stay tuned.

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