Housing Counselor Exam Questions and Answers 100% Accurate!

Default - ANSWER-When no payments made after 60 to 90 days... 30 for FHA loans Front-End Ratio Equation - ANSWER-Monthly housing expenses/gross monthly income Front-End Ratio maximums - ANSWER-28% or less - conventional loan 31% or less for FHA, 30% or less for rentals Back-End Ratio (Debt-to-Income) Equation - ANSWER-total monthly debt expenses/gross monthly income Back-End Ratio Caps - ANSWER-36% for conventional loans and renters, 43% for FHA, 45% for Energy Efficiency Mortgage loan Four C's of Credit - ANSWER-Character, Capacity, Capital, Collateral Monthly housing expenses - PITIA - ANSWER-Principal, Interest, Taxes, Insurance, Association dues and special assessments Interest only Terms - ANSWER-Only pay interest in monthly payments - good for fluctuating income, but can make payments on principal when they can FHA loans good for: - ANSWER-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 - ANSWER-United States Department of Agriculture - Rural development program USDA guaranteed loans are for - ANSWER-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 - ANSWER-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 - ANSWER-Protects lender if you stop making payments, Required if down payment is less than 20% of home value 2nd Mortgage - "Piggy back" - ANSWER-assures 1st mortgage is only 80% of sales price -- will mean higher interest rates and more fees Loan to Value Ratio -- LTV Ratio - ANSWER-% calculated by dividing the amount of outstanding loan amount by the value of home Lender must terminate PMI when LTV ratio reaches: - ANSWER-78% OR at midpoint of loan, i.e. 15 years of 30 year mortgage Adjustable Rate Mortgage - ANSWER-30 year, interest rate set for 1st 5 years then adjusts annually ARM good for: - ANSWER-Those who have $ for down payment, wants lower interest rate for few years and may not own home for more than 5 years Federal Housing Choice Voucher Program - Section 8 - Distributed by local Public Housing Agency, or PHA - ANSWER-Family income must be lower than 50% of AMI, Voucher must pay 30% of gross income, family pays the rest Redlining - ANSWER-Illegal Practice of refusing to make loans because of predominant race, color, national origin, religion, sec, disability or familial status of the residents in the neighborhood Blockbusting - ANSWER-Trying to convince someone to sell or rent a dwelling because of the entry into the neighborhood of a particular person 1954 Brown vs Board of Education - ANSWER-Supreme Court says GOV can longer support segregated programs Civil Acts Righ