Freddie Mac - Credit Smart EXAM (2025) QUESTIONS
AND (elaborated) WITH COMPLETE SOLUTIONS
The percentage of your gross monthly income that goes toward paying for your
housing expenses is called the "housing expense ratio" and is based on the total
housing payment, which includes: - (ANSWER)Principal, interest, property taxes,
homeowner's insurance, mortgage insurance, homeowner's or condo association
fees
Lenders don't include your future housing payment in your debt-to-income ratio,
only all other outstanding debts. - (ANSWER)False
The principal amount is the total amount borrowed. - (ANSWER)True
Do lenders use gross income or net profits when calculating mortgage
affordability for self-employed borrowers? - (ANSWER)Net profits
An escrow account is a special account managed by the borrower that holds funds
for property taxes and property insurance payments. - (ANSWER)False
Having adequate cash reserves demonstrates to your lender that you have
responsibly managed your money and have savings and other assets to fall back
on in case of emergency. - (ANSWER)True
Capital - or cash to close - refers to the funds you need to save in order to cover
the cost of down payment and closing costs. - (ANSWER)True
, Acceptable sources of capital include: - (ANSWER)Funds from a family member,
funds from a down payment assistance program or funds from your savings
account
Lenders consider investments to be (select all that apply): - (ANSWER)Lenders
consider investments to be IRAs, bonds, CDs, stocks and 401(k) plans.
To determine if you have adequate savings to obtain a mortgage and sustain
homeownership, lenders will average the last six months of your checking and
savings account balances. - (ANSWER)False
Lenders consider four primary factors when determining whether to approve a
loan - the 4 C's of lending. What are they? - (ANSWER)Credit, Capacity, Capital
and Collateral
Derogatory information on your credit report may include: collections,
judgements, bankruptcies and/or late payments. - (ANSWER)True
Lenders generally don't have any guidelines or restrictions when it comes to the
home you want to purchase or its condition, provided you have good credit. -
(ANSWER)False
The home inspection is ordered through the lender and determines the market
value of the home. - (ANSWER)False
AND (elaborated) WITH COMPLETE SOLUTIONS
The percentage of your gross monthly income that goes toward paying for your
housing expenses is called the "housing expense ratio" and is based on the total
housing payment, which includes: - (ANSWER)Principal, interest, property taxes,
homeowner's insurance, mortgage insurance, homeowner's or condo association
fees
Lenders don't include your future housing payment in your debt-to-income ratio,
only all other outstanding debts. - (ANSWER)False
The principal amount is the total amount borrowed. - (ANSWER)True
Do lenders use gross income or net profits when calculating mortgage
affordability for self-employed borrowers? - (ANSWER)Net profits
An escrow account is a special account managed by the borrower that holds funds
for property taxes and property insurance payments. - (ANSWER)False
Having adequate cash reserves demonstrates to your lender that you have
responsibly managed your money and have savings and other assets to fall back
on in case of emergency. - (ANSWER)True
Capital - or cash to close - refers to the funds you need to save in order to cover
the cost of down payment and closing costs. - (ANSWER)True
, Acceptable sources of capital include: - (ANSWER)Funds from a family member,
funds from a down payment assistance program or funds from your savings
account
Lenders consider investments to be (select all that apply): - (ANSWER)Lenders
consider investments to be IRAs, bonds, CDs, stocks and 401(k) plans.
To determine if you have adequate savings to obtain a mortgage and sustain
homeownership, lenders will average the last six months of your checking and
savings account balances. - (ANSWER)False
Lenders consider four primary factors when determining whether to approve a
loan - the 4 C's of lending. What are they? - (ANSWER)Credit, Capacity, Capital
and Collateral
Derogatory information on your credit report may include: collections,
judgements, bankruptcies and/or late payments. - (ANSWER)True
Lenders generally don't have any guidelines or restrictions when it comes to the
home you want to purchase or its condition, provided you have good credit. -
(ANSWER)False
The home inspection is ordered through the lender and determines the market
value of the home. - (ANSWER)False
