HUD Housing Exam 2023 with complete solutions

Which document should the counselor review with the client to identify spending habits and track expenses: - Answer- Bank statement Which additional information would the housing counselor need to prepare a household budget for this client? - Answer- Net income Which item in the client's budget is a fixed expense? - Answer- Car lease payment What is the maximum percent of area medium income allowable for a household to qualify for a Housing Choice Voucher? - Answer- 50% Which is the maximum recommended housing ratio for renting an apartment? - Answer- 30% Eligibility requirements for down payment assistance programs include which factors? - Answer- Income, homebuyer education, and purchase price The client is considering an FHA Mortgage. What is the upfront mortgage insurance premium (UFMIP) for an FHA mortgage? - Answer- 1.75% The client decides to purchase a townhouse through a down payment assistance program with a recapture clause. Three years later, the client remarries, and his wife owns a single family home. Which situation might cause an accelerated loan payment? - Answer- Client moves into wife's home and rents his townhouse to a tenant If the client was denied a mortgage loan and the lender told him to come back after his divorce has been final for three years, what is the best advice the counselor can provide to the client? - Answer- Contact the Federal Trade Commission as the lender's action might violate the Equal Credit Opportunity Act A question from a lender on which topic would be inappropriate? - Answer- Medical history Which is a responsibility of a housing counselor? - Answer- Educate homebuyers about their rights In order to minimize the impact on the client's credit score, what is the maximum time frame within which the client should apply for pre-approval from multiple lenders? - Answer- 30-day period. Which is a responsibility of a home inspector? - Answer- A) Evaluate condition of the home B) Examine medical systems C) identify items to be repaired or replaced Which is the best reason a counselor would suggest that client speak to three to five difference lenders before choosing one? - Answer- So the client can compre loan estimates Which is the best advice that a housing counselor can give to protect against identity theft? - Answer- Review credit report at least once a year The client tells the lender that he is expecting a raise soon. Which actions should the lender take? - Answer- Provide a loan estimate without factoring in the raise If the client obtains a mortgage of $100,000 typically how much should he expect to pay for closing costs? - Answer- $4k - 3-4% on average The client is considering renting an apartment with a different landlord. Which would be an upfront cost of living to the new apartment? - Answer- Application fee The client is second-guessing his decision to buy a home, so the counselor asks a series of questions. Which response would be best aligned with the homeownership option for this client? - Answer- Client wants to customize his home with do-it-yourself projects What is the maximum mortgage payment for which this client would qualify using a standard conventional loan? - Answer- $1,065 - 28% Which steps should the counselor take to assess the client's readiness to purchase a home? - Answer- A) Assess funda available for upfront costs B) Calculate debt-to-income ratio C) Determine máximum housing payment What is the maximum debt-to-income ratio for an FHA Loan? - Answer- 43% Debt-to-income ratio: - Answer- $435 debt payment plus mortgage payment $950 = $1,385 ($1,385/gross monthly income $4,166.67 = 33%) If the client seeks an FHA Energy Efficient Mortgage (EEM) what is the maximum housing payment for which he can qualify? - Answer- Use front-end ratio for EEM loan which is 31% $4,167 x 31% = $1,292.00 On which factor is a borrower's annual mortgage insurance premium (MIP) based? - Answer- Current principal balance Which is the upfront mortgage insurance premium if the client purchases a home with an FHA loan amount of $116,000? - Answer- $2,030 Multiple balance by 1.75% The client only tracks bill payments. Which should the housing counselor recommend to help the client begin planning for a home purchase? - Answer- Track all income and expenses How should client apply for the Housing Choice Voucher program? - Answer- Contact the local Public Housing Authority Which website provides information on programs to assist homebuyers with down payment assistance? - Answer- HUD.gov Based on the client's income, savings, and credit score of 700 which mortgage option is best? - Answer- Conventional loan This client is denied a loan to purchase a home because she has not lived in the country for a least ten years. Which advice should counselor provide? - Answer- Report the action to the Federal Trade Commission as it is a violation of the Equal Credit Opportunity Act If the client submits a loan application, which document should be received within 3 business was days? - Answer- Loan estimate Which best describes pre-approval from a lender? - Answer- The lender commits to a fixed amount based on a review of the client's application Does this client meet a lender's expectation for continued employment? - Answer- Yes, because the client has been at job over two years In reviewing a loan estimate, the counselor finds fees for services that seem unnecessary. What is most likely explanation for these fees? - Answer- Predatory lending practices The client thinks her cost of living is going to be the same because her mortgage payment and he rental payment are comparable. What are three recurring costs associated with homeownership that are not part of renting? - Answer- Homeowners insurance, property taxes, and home repairs Which additional information should the counselor request from the client to determine her readiness to purchase a home? - Answer- Expenses Which is the client's maximum mortgage payment if lender's housing ratio is 28% - Answer- $56,400/ 12 = $4,700 x 0.28 = $1,316 Which is the minimum percentage of a purchase price the client needs to make as a down payment to avoid having to pay mortgage insurance with conventional loan? - Answer- 20% Which factor determines whether the client will pay private insurance vs mortgage insurance premium? - Answer- Type of loan Budget recommendation: - Answer- Reduce food expense by cooking at home and eating out less Child and Dependent Care Tax credit: - Answer- For those working or actively looking for work and paying a service to take care of a dependent. The client currently keeps the $45k remaining from the life insurance settlement in a checking account. Her goal is to use this money towards her down payment. Which action should counselor suggest? - Answer- Move funds to a large purchase savings account with limited access 3-6 months of living expenses needed in emergency savings: - Answer- $5,294 monthly expenses x 3 = $15,882 The client wants to move her family to a lower-priced rental unit to save money for a home but is struggling with upfront fees. What advice? - Answer- Find an individual landlord and negotiate Which type of lease and tenancy best protects the tenant? - Answer- A written lease with contractual tenancy The client wants to purchase a new home but her lease might expire before she can move into it. Which is the best advice? - Answer- Discuss a tenancy-at-sufferance agreement with current landlord Which tactic would be most effective for the client to encourage a positive landlord-tenant experience during a tenant initiated early lease termination? - Answer- Community well with the landlord Which additional information would counselor need to prepare the action plan for this client? - Answer- Documentation of household expenses Which is the best recommendation for counselor to give to client to help improve credit score? - Answer- Pay more than the minimum payment each month to recuse the credit card balance Which factor would impact clients future housing affordability? - Answer- A reduction in income when the survivor benefit runs out The client currently pays $2,050 in rent though mortgage payment could be higher. Which is most effective strategy to be able to manager a higher payment? - Answer- Delay home purchase until the car loan is paid off Which was instituted by Congress to better protect homebuyers following the most recent housing crisis? - Answer- Consumer Finance Protection Bureau (CFPB) Which initiative encourages housing counseling agencies to advocate that lenders operate in underserved areas? - Answer- Affirmatively Furthering Fair Housing Which action taken by a counseling agency would affirmatively further fair housing? - Answer- Create an outreach campaign designed to raise awareness about critical housing topics Which section of credit report shows a client's payment history? - Answer- Account information Back-end ratio for FHA loan is: - Answer- 43% Which is the down payment required on a $375,000 home with an FHA mortgage? - Answer- $13,125 or 3.5% Which government rule or regulation may have been violated when the loan officer denied loan for the condo? - Answer- Fair Housing Act The client has recently replaced her sewer lines. Which is the best information a housing counselor should provide this client who still worries about sewer backup and is considering flood insurance? - Answer- Flood insurance policies do not cover water that comes from inside - content coverage would be needed The client's child and a friend are severely injured in the client's home. Which claim is the most likely covered under her homeowner's insurance? - Answer- A claim for medical payments of the friend only The client finally leaves her home and moves to rental and is concerned about being displaced if the apartment become unlivable. What is best advice? - Answer- Purchase a renters insurance with loss-of-use coverage policy Which is the best advice a counselor can give this client who is concerned about high heating and wants info on home to plan for home maintenance? - Answer- Create a list of each key system in her home with target dates for maintenance and replacement Which is the best advice a counselor can provide if the client needs to replace old windows in her home? - Answer- Explore an FHA Energy Efficiency loan Best advice a counselor can offer for this client to prepare and save for major household repairs? - Answer- Create a system maintenance plan Which action could assist this client in addressing her current maintenance concerns? - Answer- Install window insulation kits Which is the best advice counselor can provide if client wants to refinance at a lower rate to avoid missing additional payments? - Answer- Discuss alternatives as refinancing is not likely to be approved After how many days can foreclosure proceedings begin if the client is not being evaluated for loss mitigation and has missed payment on FHA loan? - Answer- 120 days Which is most likely consequence of missing a single mortgage payment? - Answer- Late fees may be charged Which is the best advice a housing counselor can provide about an emergency preparedness plan? - Answer- Plan a safe escape route from the home Best advice about an emergency preparedness plan? - Answer- Encourage involvement of entire family Best financing option for client to complete multiple home repairs over time without refinancing? - Answer- Home Equity Line of Credit The client has $25k equity in her home and needs $49k to replace windows and pipes. Which finance option should the counselor recommend? - Answer- FHA 203k loan Which is the key advantage for using a real estate agent vs selling her house on her own? - Answer- Real estate agency negotiates sale on behalf of client Which document should the client expect to sign to begin the home sale process? - Answer- Listing agreement The client decides to sell her home and wants to compete various home repairs before listing for sale. Which is the best reason to complete repairs? - Answer- Hemos the seller prepare for the home inspections Which characteristic of this client's situation disqualifies her for the FHA-HAMP loan modification program? - Answer- The he client is eligible for another FHA loss mitigation option Which is the best option for this client if she cannot sell her home and she does not want to try and keep it? - Answer- Deed-in-lieu foreclosure Which is the most likely consequence of a short sale? - Answer- The forgiven mortgage deficiency may be treated as taxable income The client is afraid her servicer migh