HUD Practice Exam Questions and Answers 100% Correct!

What act came about after the assassination of MLK? - ANSWER-The Civil Rights Act of 1968 A client does not receive a written monthly statement from the credit card company. Which credit law could this omission violate? - ANSWER-Fair Credit Billing Act In which situation would a client's responsibilities, recurring costs, and upfront costs be evaluated? - ANSWER-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? - ANSWER-Answer is 728. 40x15=_x52_/12=_.28=728 Front end ratio for Conventional Loan - ANSWER-28% Back End ratio - ANSWER-Only calculate if you have expenses in the problem. Only include debts that appear on Credit report. If they say Debt to income ratio : - ANSWER-they are looking for Back End Ratio If it says housing ratio : - ANSWER-Calculate front end If they say "What is the highest monthly mortgage payment" and they give you expenses: - ANSWER-You do both front & back end & choose the lowest total 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? - ANSWER-2300-450=_X.32=592 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)? - ANSWER-ANSWER IS 30% 1250+88/4460 How to solve for back end ratio - ANSWER-back end ratio = total monthly debt expenses/ gross monthly income 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 $2,250 $4,500 $5,250 - ANSWER-Down payment for EEM is 3.5% so you take 150,000 x .035==$1750 EEM - ANSWER-Energy Efficient Mortgage A type of FHA loan front end: 33% back end max: 45% Which type of assistance administered by a public housing authority allows for location flexibility? Project-based vouchers USDA Tenant-based vouchers FHA - ANSWER-Tenant-based vouchers A client's payment history affects which factor of creditworthiness? Collateral Character Capital Capacity - ANSWER-Character Which action may a lender take to determine a borrower's character? Examine pay stubs to determine amount of income. Call an employer to verify employment. Calculate housing ratios to see debt obligations. Review the appraisal. - ANSWER-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 debt-to-income ratio of 36%. The home has appraised for $155,000. Which factor of creditworthiness will most likely be an obstacle to purchasing the home? Capacity Collateral Character