HUD Practice Test 2023| 89 Questions
with Correct Answers| Graded A
Which document is most important when working with a client to develop an initial
budget as part of a Client Action Plan? - -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? - -Find a second job
-A credit report may contain which information? - -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? - -It increases credit utilization, causing a negative impact on the credit
score.
-Which action would a client take to improve a credit score? - -Pay delinquent accounts
-A client does not receive a written monthly statement from the credit card company.
Which credit law could this omission violate? - -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%. - -"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? - -File an identity theft report
, -In which situation would a client's responsibilities, recurring costs, and upfront costs
be evaluated? - -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?
- -$728
-Which type of government insured loan was created for financing homes in rural
areas? - -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? - -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? - -$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)? - -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? - -$1,750
-Under which condition would most down payment assistance programs approve a
waiver of the homeownership education requirement? - -Most will not waive the
homeownership education requirement.
-Which type of assistance administered by a public housing authority allows for location
flexibility? - -Tenant-based vouchers
-A client's payment history affects which factor of creditworthiness? - -Character
-Which action may a lender take to determine a borrower's character? - -Call an
employer to verify employment
with Correct Answers| Graded A
Which document is most important when working with a client to develop an initial
budget as part of a Client Action Plan? - -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? - -Find a second job
-A credit report may contain which information? - -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? - -It increases credit utilization, causing a negative impact on the credit
score.
-Which action would a client take to improve a credit score? - -Pay delinquent accounts
-A client does not receive a written monthly statement from the credit card company.
Which credit law could this omission violate? - -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%. - -"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? - -File an identity theft report
, -In which situation would a client's responsibilities, recurring costs, and upfront costs
be evaluated? - -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?
- -$728
-Which type of government insured loan was created for financing homes in rural
areas? - -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? - -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? - -$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)? - -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? - -$1,750
-Under which condition would most down payment assistance programs approve a
waiver of the homeownership education requirement? - -Most will not waive the
homeownership education requirement.
-Which type of assistance administered by a public housing authority allows for location
flexibility? - -Tenant-based vouchers
-A client's payment history affects which factor of creditworthiness? - -Character
-Which action may a lender take to determine a borrower's character? - -Call an
employer to verify employment
