Freddie Mac - Credit Smart Exam Test Questions and Answers Graded A+
The percentage of your gross monthly income that goes
Principal, interest, property taxes, homeowner's insur-
toward paying for your housing expenses is called the
ance, mortgage insurance, homeowner's or condo asso-
"housing expense ratio" and is based on the total housing
ciation fees
payment, which includes:
Lenders don't include your future housing payment in
your debt-to-income ratio, only all other outstanding False
debts.
The principal amount is the total amount borrowed. True
Do lenders use gross income or net profits when calculat-
Net profits
ing mortgage attordability for self-employed borrowers?
An escrow account is a special account managed by the
borrower that holds funds for property taxes and property False
insurance payments.
Having adequate cash reserves demonstrates to your
lender that you have responsibly managed your money
True
and have savings and other assets to fall back on in case
of emergency.
Capital - or cash to close - refers to the funds you need
to save in order to cover the cost of down payment and True
closing costs.
Funds from a family member, funds from a down payment
Acceptable sources of capital include:
assistance program or funds from your savings account
Lenders consider investments to be IRAs, bonds, CDs,
Lenders consider investments to be (select all that apply):
stocks and 401(k) plans.
To determine if you have adequate savings to obtain a
mortgage and sustain homeownership, lenders will av-
False
erage the last six months of your checking and savings
account balances.
, Freddie Mac - Credit Smart Exam Test Questions and Answers Graded A+
Lenders consider four primary factors when determining
whether to approve a loan - the 4 C's of lending. What are Credit, Capacity, Capital and Collateral
they?
Derogatory information on your credit report may include:
collections, judgements, bankruptcies and/or late pay- True
ments.
Lenders generally don't have any guidelines or restric-
tions when it comes to the home you want to purchase False
or its condition, provided you have good credit.
The home inspection is ordered through the lender and
False
determines the market value of the home.
Manufactured homes are the same as mobile homes and
don't need to meet federal construction and safety stan- False
dards.
If you make extra payments on your loan, that can help
pay down the principal faster and thus greatly reduce the True
interest due on the loan.
Government insured loans, such as FHA loans, are the only
False
low down payment mortgages available to homebuyers.
A fixed-rate mortgage is a loan where the interest rate
True
stays the same for the life of the loan.
Which of the following loans are guaranteed by the fed-
VA, USDA, FHA
eral government (select all that apply):
There may be special loan products and first-time home-
buyer or attordable homeownership programs available
in your community and it's worth calling your local True
lenders, credit unions and housing counseling agencies
to find out about your options.
The percentage of your gross monthly income that goes
Principal, interest, property taxes, homeowner's insur-
toward paying for your housing expenses is called the
ance, mortgage insurance, homeowner's or condo asso-
"housing expense ratio" and is based on the total housing
ciation fees
payment, which includes:
Lenders don't include your future housing payment in
your debt-to-income ratio, only all other outstanding False
debts.
The principal amount is the total amount borrowed. True
Do lenders use gross income or net profits when calculat-
Net profits
ing mortgage attordability for self-employed borrowers?
An escrow account is a special account managed by the
borrower that holds funds for property taxes and property False
insurance payments.
Having adequate cash reserves demonstrates to your
lender that you have responsibly managed your money
True
and have savings and other assets to fall back on in case
of emergency.
Capital - or cash to close - refers to the funds you need
to save in order to cover the cost of down payment and True
closing costs.
Funds from a family member, funds from a down payment
Acceptable sources of capital include:
assistance program or funds from your savings account
Lenders consider investments to be IRAs, bonds, CDs,
Lenders consider investments to be (select all that apply):
stocks and 401(k) plans.
To determine if you have adequate savings to obtain a
mortgage and sustain homeownership, lenders will av-
False
erage the last six months of your checking and savings
account balances.
, Freddie Mac - Credit Smart Exam Test Questions and Answers Graded A+
Lenders consider four primary factors when determining
whether to approve a loan - the 4 C's of lending. What are Credit, Capacity, Capital and Collateral
they?
Derogatory information on your credit report may include:
collections, judgements, bankruptcies and/or late pay- True
ments.
Lenders generally don't have any guidelines or restric-
tions when it comes to the home you want to purchase False
or its condition, provided you have good credit.
The home inspection is ordered through the lender and
False
determines the market value of the home.
Manufactured homes are the same as mobile homes and
don't need to meet federal construction and safety stan- False
dards.
If you make extra payments on your loan, that can help
pay down the principal faster and thus greatly reduce the True
interest due on the loan.
Government insured loans, such as FHA loans, are the only
False
low down payment mortgages available to homebuyers.
A fixed-rate mortgage is a loan where the interest rate
True
stays the same for the life of the loan.
Which of the following loans are guaranteed by the fed-
VA, USDA, FHA
eral government (select all that apply):
There may be special loan products and first-time home-
buyer or attordable homeownership programs available
in your community and it's worth calling your local True
lenders, credit unions and housing counseling agencies
to find out about your options.
