HUD Practice Test and Correct
Answers
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
-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
Answers
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
-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
