HUD Practice Test Questions And Answers 2023
Which document is most important when working with a client to develop an initial budget as part of a Client Action Plan? - Answer- Pay Stub
A client would like to purchase a home within one year. The client is motivated to increase household income as a way to save for a down payment and qualify for a loan.
Which is the
best solution for the client to reach this goal? - Answer- Find a second job
A credit report may contain which information? - Answer- The number of accounts in collection status
Six months ago a client left a job as a reporter to start a
business in the retail industry. To prepare to buy a house, the client closed credit card accounts and has been using savings to
pay down credit card debt and collections. The client has not
been able to save much for a down payment with all the debt
payments but knows about an affordable homeownership
program that only requires a 1% down payment with an FHA
loan. What might result from the client closing the credit card
accounts? - Answer- It increases credit utilization, causing a negative impact on the credit
score.
Which action would a client take to improve a credit score? - Answer- Pay delinquent accounts
A client does not receive a written monthly statement from the credit card company. Which credit law could this omission violate? - Answer- Fair Credit Billing Act
A client shopping for a mortgage loan presents a housing counselor with an offer from a
local mortgage lender. The interest rate on the offer is 7.5% for a 30-year fixed rate mortgage with a 20% down payment required. The counselor reviews the client file and determines the client's credit score is 725 and the client's total debt-to-income ratio is 20%. - Answer- "I am unable to determine whether the loan is predatory, but I suggest you shop around with other lending sources."
Which action should a counselor recommend a client take first after discovering identity theft? - Answer- File an identity theft report
In which situation would a client's responsibilities, recurring costs, and upfront costs be evaluated? - Answer- When weighing housing options A client works 40 hours a week making $15 an hour. What is the highest monthly mortgage the client can afford based on income if the client secures a conventional loan? - Answer- $728
Which type of government insured loan was created for financing homes in rural areas? - Answer- USDA
A client keeps having budget problems due to unexpected expenses. Which financial tool would best assist this client to prepare for unexpected expenses and avoid increasing credit usage? - Answer- Emergency Funds
A client has a monthly household income of $2,300, monthly debt payments of $450, and an optimal monthly housing ratio of 32%. What is the client's optimal monthly housing payment? - Answer- $736
Use Front-End Ratio
What is the back-end ratio for a client with a monthly housing expense of $1,250, a monthly total of $88 in other consumer debt payments, and a gross household income of $4,460 per month (rounded to the nearest whole percent)? - Answer- 30%
A client earns a salary of $45,000 at a job held for three years. The client has credit card bills, student loans, and a car loan totaling $500 per month. The client has already saved $3,500 for a down payment and is using an FHA Energy Efficient Mortgage (EEM). If the client wants to make the minimum down payment for a home priced at $150,000, how much more does the client need to save? - Answer- $1,750
Under which condition would most down payment assistance programs approve a waiver of the homeownership education requirement? - Answer- Most will not waive the homeownership education requirement.
Which type of assistance administered by a public housing authority allows for location flexibility? - Answer- Tenant-based vouchers
A client's payment history affects which factor of creditworthiness? - Answer- Character
Which action may a lender take to determine a borrower's character? - Answer- Call an employer to verify employment
A client is in the process of purchasing a home with a sales price of $162,000. The client has a net worth of $50,000, a credit score of 680, and a debt-to-income ratio of 36%. The home has appraised for $155,000. Which factor of creditworthiness will most likely be an obstacle to purchasing the home? - Answer- Collateral
When a lender inquires about how much money a borrower has saved for a down payment on a home, what factor is being considered? - Answer- Capital
Which document is most important when working with a client to develop an initial budget as part of a Client Action Plan? - Answer- Pay Stub
A client would like to purchase a home within one year. The client is motivated to increase household income as a way to save for a down payment and qualify for a loan.
Which is the
best solution for the client to reach this goal? - Answer- Find a second job
A credit report may contain which information? - Answer- The number of accounts in collection status
Six months ago a client left a job as a reporter to start a
business in the retail industry. To prepare to buy a house, the client closed credit card accounts and has been using savings to
pay down credit card debt and collections. The client has not
been able to save much for a down payment with all the debt
payments but knows about an affordable homeownership
program that only requires a 1% down payment with an FHA
loan. What might result from the client closing the credit card
accounts? - Answer- It increases credit utilization, causing a negative impact on the credit
score.
Which action would a client take to improve a credit score? - Answer- Pay delinquent accounts
A client does not receive a written monthly statement from the credit card company. Which credit law could this omission violate? - Answer- Fair Credit Billing Act
A client shopping for a mortgage loan presents a housing counselor with an offer from a
local mortgage lender. The interest rate on the offer is 7.5% for a 30-year fixed rate mortgage with a 20% down payment required. The counselor reviews the client file and determines the client's credit score is 725 and the client's total debt-to-income ratio is 20%. - Answer- "I am unable to determine whether the loan is predatory, but I suggest you shop around with other lending sources."
Which action should a counselor recommend a client take first after discovering identity theft? - Answer- File an identity theft report
In which situation would a client's responsibilities, recurring costs, and upfront costs be evaluated? - Answer- When weighing housing options A client works 40 hours a week making $15 an hour. What is the highest monthly mortgage the client can afford based on income if the client secures a conventional loan? - Answer- $728
Which type of government insured loan was created for financing homes in rural areas? - Answer- USDA
A client keeps having budget problems due to unexpected expenses. Which financial tool would best assist this client to prepare for unexpected expenses and avoid increasing credit usage? - Answer- Emergency Funds
A client has a monthly household income of $2,300, monthly debt payments of $450, and an optimal monthly housing ratio of 32%. What is the client's optimal monthly housing payment? - Answer- $736
Use Front-End Ratio
What is the back-end ratio for a client with a monthly housing expense of $1,250, a monthly total of $88 in other consumer debt payments, and a gross household income of $4,460 per month (rounded to the nearest whole percent)? - Answer- 30%
A client earns a salary of $45,000 at a job held for three years. The client has credit card bills, student loans, and a car loan totaling $500 per month. The client has already saved $3,500 for a down payment and is using an FHA Energy Efficient Mortgage (EEM). If the client wants to make the minimum down payment for a home priced at $150,000, how much more does the client need to save? - Answer- $1,750
Under which condition would most down payment assistance programs approve a waiver of the homeownership education requirement? - Answer- Most will not waive the homeownership education requirement.
Which type of assistance administered by a public housing authority allows for location flexibility? - Answer- Tenant-based vouchers
A client's payment history affects which factor of creditworthiness? - Answer- Character
Which action may a lender take to determine a borrower's character? - Answer- Call an employer to verify employment
A client is in the process of purchasing a home with a sales price of $162,000. The client has a net worth of $50,000, a credit score of 680, and a debt-to-income ratio of 36%. The home has appraised for $155,000. Which factor of creditworthiness will most likely be an obstacle to purchasing the home? - Answer- Collateral
When a lender inquires about how much money a borrower has saved for a down payment on a home, what factor is being considered? - Answer- Capital
