Housing Counselor Exam Prep (All solved accurately)

Default correct answers When no payments made after 60 to 90 days... 30 for FHA loans Front-End Ratio Equation correct answers Monthly housing expenses/gross monthly income Front-End Ratio maximums correct answers 28% or less - conventional loan 31% or less for FHA, 30% or less for rentals Back-End Ratio (Debt-to-Income) Equation correct answers total monthly debt expenses/gross monthly income Back-End Ratio Caps correct answers 36% for conventional loans and renters, 43% for FHA, 45% for Energy Efficiency Mortgage loan Four C's of Credit correct answers Character, Capacity, Capital, Collateral Monthly housing expenses - PITIA correct answers Principal, Interest, Taxes, Insurance, Association dues and special assessments Interest only Terms correct answers Only pay interest in monthly payments - good for fluctuating income, but can make payments on principal when they can FHA loans good for: correct answers those who do not qualify for conventional because of flawed credit history, bankruptcy, high debt-to-income ratios, or limited funds for down payment & closing costs USDA loans correct answers United States Department of Agriculture - Rural development program USDA guaranteed loans are for correct answers those who make less than 115% of Area Median Income, or AMI, no funds for down payment, and without adequate housing. USDA Direct loans are for correct answers those who make less than 80% of AMI, unable to obtain other financing but have reasonable credit... loans can go for up to 33 or 38 years Mortgage Insurance correct answers Protects lender if you stop making payments, Required if down payment is less than 20% of home value 2nd Mortgage - "Piggy back" correct answers assures 1st mortgage is only 80% of sales price -- will mean higher interest rates and more fees Loan to Value Ratio -- LTV Ratio correct answers % calculated by dividing the amount of outstanding loan amount by the value of home