Credit Smart HomebuyerU Practice Test

These questions are part of the practice quiz. Start practicing

• What is the process for correcting errors on a credit report?
• Which factor relates to the borrower's ability to repay the loan?
• Which statement about HELOC usage is true?
• Name three common ways to improve your credit score before applying for a mortgage.
• Making extra payments on a loan typically has what effect on the total interest paid?
• In a real estate transaction, including inspection results as a contingency can allow the buyer to walk away without penalty.
• Which factor can allow conventional programs to exceed the 28% front-end DTI ceiling?
• 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.
• Which statement about government insured loans is true?
• The statement 'The MLS is publicly available and widely used by homebuyers' is true.
• Which loan type is guaranteed by the federal government?
• Lenders consider investments to be which of the following?
• When is the real estate agent's commission typically paid?
• Which scam involves a contractor asking for money up front and leaving after completing little or no repair work?
• With a rate float-down option, what can happen if market rates drop before closing?
• True or False? Contingencies are items within a property that the homebuyer would like to have included in the purchase.
• The mortgage is not secured by the home.
• Which statement about property taxes and homeowners insurance is correct?
• Which statement about earnest money is true?
• The lender will order an appraisal which substitutes for a home inspection.
• If you can't keep your home any longer, there are other options to avoiding foreclosure. What might these options include?
• Which option would be considered a refinancing method to avoid foreclosure?
• Which of the following is NOT listed as an alternative to foreclosure?
• The statement 'A home inspection is ordered and paid for by the seller' is true or false?
• Using your credit card wisely means:
• The funds required to cover the down payment and closing costs are referred to as:
• What steps are typically involved in the post-purchase financial plan for new homeowners?
• If a home appraisal determines market value lower than the loan amount, what is a likely consequence?
• If a lender denies your loan, they're required by law to provide the applicant with an explanation and share the credit score they used to make the lending decision.
• For verifying self-employment income, which documentation is commonly requested?
• What term describes a situation where another qualified buyer takes over your mortgage debt and the payments?
• Which statement about escrow accounts is true?
• If the appraisal is low, which option might a buyer pursue?
• Which of the following is NOT one of the four C's of lending?
• All perils are included in homeowner's insurance policies.
• The lender will order an appraisal which substitutes for a home inspection.
• When evaluating a homeowners association (HOA), which factors should you consider?
• Which type of food is recommended in an emergency kit?
• What are contingencies in a real estate deal?
• What is an amortization schedule?
• Which option is explicitly listed as a potential step if you can't qualify for a loan on your own?
• 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.
• Which statement about the relationship between down payment and PMI is true?
• Private mortgage insurance (PMI) protects the borrower if they can't make their mortgage payment.
• There may be special loan products and affordable homeownership programs available locally; who should you contact to learn about options?
• If you have an emergency fund to cover 3 - 6 months of expenses in case of loss of income, you've saved enough money for home maintenance and repairs.
• LTV stands for loan-to-value and represents the loan amount as a percentage of the property's value.
• If a homebuyer has a friendly agent who markets well, is further homework unnecessary to choose a good agent?
• Manufactured homes are the same as mobile homes and don't need to meet federal construction and safety standards.
• What is a back-end DTI limit commonly used by conventional lenders?
• Routine maintenance refers to tasks that keep things running smoothly and efficiently in a home.
• Which of the following is a typical credit-related reason to address before applying for a mortgage?
• What is a prepayment penalty, and do conventional loans typically include them?
• Back-end debt-to-income (DTI) ratio is calculated by which method?
• What is homeowners insurance and what does it typically cover?
• Which statement describes compensating factors as they relate to DTI allowances?
• You should never sign a loan document that has blank lines.
• What is front-end DTI acceptable range for conventional loans?
• Which statement defines the numerator used in the front-end debt-to-income (DTI) calculation?
• Which statement best distinguishes earned income from self-employment income in mortgage underwriting?
• Which factors should you compare when evaluating loan offers besides the rate?
• Which statement about neighborhood importance is true?
• Which statement best describes the scope of the Fair Housing Law?
• Which items may be included as derogatory information on a credit report?
• What best describes a reserve in mortgage lending?
• Which scam charges the homeowner rent to stay in the home with a promise that they can purchase it back when their finances improve?
• What is a Closing Disclosure (CD) and when must you receive it?
• What is the difference between pre-qualification and pre-approval in mortgage lending?
• What is a co-signer in mortgage lending?
• On conventional loans, a 20% down payment eliminates PMI.
• What term describes selling your home for less than the mortgage balance with the lender writing off the remaining debt?
• What is the purpose of a title search?
• Which option involves refinancing to replace the existing loan with a new one to avoid foreclosure?
• Which component of the monthly mortgage payment can change due to changes in property tax or insurance?
• What are the four C's of lending?
• Which tool is recommended to access canned goods in an emergency kit?
• Which item is included in an emergency kit?
• What is the role of a real estate attorney in some states, and is it required for mortgage closings?
• Earnest money reflects the buyer's seriousness and is held in escrow; it applies toward closing costs and is refundable only under specified contingencies.
• What is a potential consequence of a low appraisal on a home purchase?
• Which statement best describes prepayment penalties in conventional loans?
• Which items belong in a post-purchase budget for homeowners?
• What is a hard inquiry and how can it affect your credit score?
• NOT listed as an acceptable source of capital?
• Which loan program is most likely to require no down payment for eligible veterans?
• What option might the loan servicer use to pause foreclosure and give you time to sell?
• Making extra payments toward the loan principal can lead to which of the following outcomes?
• How does a higher credit score impact mortgage interest rates?
• Which mortgage type describes a loan where the interest rate and monthly principal and interest payments stay the same for the life of the loan, while total monthly payments can change with property tax, insurance, or other escrow items?
• A fixed-rate mortgage has an interest rate that stays the same for the life of the loan.
• What is the difference between a home warranty and homeowners insurance?
• Which program is most associated with no down payment for eligible veterans?
• The following statement is true: If the home inspector finds an issue with the property, the buyer has the right to walk away without financial penalty if inspection results are included as a contingency in the purchase offer.
• What happens to the monthly principal and interest on a fixed-rate mortgage over the life of the loan?
• If you owe $180,000 on a home valued at $200,000, what is the loan-to-value (LTV)?
• Is it acceptable to borrow money from a family member for your down payment if you intend to repay them?
• What is a Loan Estimate and why is it important?
• What should you expect during the home appraisal process?
• Government insured loans, such as FHA loans, are the only option for low down payment mortgages.
• Which term describes the scam where someone offers cash for your home title but leaves you with the mortgage?
• Under which arrangement might the buyer pay the agent's commission?
• Can buyers request that certain items stay with the home as part of the sale?
• What is the typical purpose of an escrow account in mortgage lending?
• The buyer will have plenty of time at closing to read all documents in their entirety.
• Which statement about back-end DTI is true?
• If you get a fixed-rate mortgage, your monthly payment to the lender won't change for the life of the loan.
• Which statement about the processing step in the mortgage process is true?
• What is the typical range for closing costs as a percentage of the home price?
• Which item is commonly considered derogatory on a credit report?
• Which item is NOT listed as a component of an emergency kit?
• Which document is used by lenders to present the final terms and closing costs to borrowers?
• Tax prorations at closing may require the buyer to reimburse the seller for taxes the seller prepaid.
• What is the difference between a rate lock and a rate float-down?
• When making an offer, should you always offer less than the asking price?
• The home inspection is ordered through the lender and determines the market value of the home.
• Not applicable to the final walk-through, the buyer should verify property condition before closing.
• Which option might a loan servicer use to pause foreclosure and give you time to sell?
• Which of the following is a landscaping-related home safety practice?
• Which statement best describes mortgage insurance and when it is typically required?
• Why do lenders verify liquid assets for reserves?
• Who should you contact for mortgage relief options during a disaster?
• Which option best describes what happens after underwriting?
• Which statement best describes escrow in mortgage payments?
• To prepare for and respond to emergencies and disasters, you can do the following:
• Which 4 C describes the borrower's ability to repay based on income and obligations?
• Which items are commonly conveyed with the home?
• A Home Equity Line of Credit (HELOC) is best described as:
• How does a mortgage's APR differ from its interest rate?
• When purchasing a home, you may owe the seller a prorated amount for property or school taxes the seller prepaid.
• Why is credit utilization important for score calculation?
• The mortgage secures the loan with the home, essentially listing the home as collateral.
• Name the four major loan types commonly used for home purchases in the United States.
• What down payment percentage is generally required on conventional conforming loans to avoid private mortgage insurance (PMI)?
• In the context of PMI, what happens when equity reaches 20%?
• Who is typically responsible for paying the majority of the real estate agent's commission at closing?
• Why is a home inspection recommended even if the appraisal passes?
• What is an escrow account in the mortgage context?
• Which action should you take first when disaster strikes?
• Which statement best describes fixed-rate versus adjustable-rate mortgages?
• What is the purpose of the credit report in mortgage underwriting?
• Which statement about escrow and monthly payments is accurate?
• In credit report disputes, what is a typical timeframe to correct inaccuracies?
• What term describes cash needed to close on a property, including the down payment, closing costs, and any reserves?
• Which item is commonly included in an emergency kit?
• Which option is NOT one of the four C's of lending?
• The back-end debt-to-income ratio is calculated by dividing total monthly obligations by gross monthly income. Which of the following is included in total monthly obligations?
• Which statement about escrow and property taxes is correct?
• Which action should you take if you have trouble paying your mortgage?
• What is a rate-lock period for mortgage rates?
• What is the importance of escrow for property taxes and insurance?
• What is the term for transferring the title of the home back to the lender in exchange for cancellation of the mortgage debt?
• When is PMI typically required on a conventional loan?
• Which statement best describes home equity?
• Real estate licensing typically requires which of the following?
• Which scam involves someone offering to loan you money for home repairs while you wait for your insurance money?
• What is loan-to-value (LTV) ratio and why does it matter for approval?
• Which of the following is NOT a protected class under the Fair Housing Law?
• Homebuyers who don't have a 20% down payment saved might have the following options.
• What is Private Mortgage Insurance (PMI) and when is it required on conventional loans?
• What is the correct order of steps in the mortgage loan process?
• Which statement about online scams and cybersecurity habits is correct?
• Which statement about hard inquiries is true?
• What is a soft inquiry and when does it occur?
• What is MIP in FHA loans and how long can it last?
• Which factor could lead to an increase in the back-end DTI ratio?
• Lenders generally don't have any guidelines or restrictions on the home you purchase or its condition, provided you have good credit.
• What is typically true about earnest money?
• Which is an example of a government-backed loan?
• Which arrangement allows a new qualified borrower to take over the existing mortgage and payments?
• Which statement about closing costs is true?
• Which statement about negative amortization is true?
• Which factor is not included in APR calculation?
• Making pre-payments can help you pay off your loan sooner.
• Real estate agents can assist with which of the following in a home sale?
• What distinguishes FHA loan from conventional financing?
• Not all homeowner's insurance policies cover every peril.
• Which term fits the description: Do you have a history of paying your bills/debts on time?
• Which statement best describes FHA financing compared with conventional financing?
• What is the effect of a high credit utilization on your score and on financing?
• Which of the following are acceptable sources of capital for a mortgage down payment?
• Which option includes exactly the four terms Capacity, Capital, Credit, and Collateral?
• Tenancy in Common is a type of ownership structure where two or more people own the property, all with equal ownership, and the share of each owner passes to the other upon the other's death.
• Which item is typically included in closing costs?
• Which statement about the down payment is true?
• Is the MLS publicly available and commonly used by homebuyers?
• Lenders determine adequacy of savings by averaging the last six months of your checking and savings balances.
• Which resource is recommended for foreclosure prevention counseling?
• Where is earnest money typically held?
• When searching for a contractor, you should obtain multiple bids and avoid paying the full amount before the work starts.
• The final walk-through gives the buyer a final chance to make sure everything is in order at the property and resolve any outstanding issues.
• How does underwriting treat assets and reserves?
• In the mortgage loan process, which step typically occurs after loan underwriting?
• What is the purpose of the Closing Disclosure form in the mortgage process?
• Which statement about APR is true?
• What percentage makes up the FICO score for Amounts owed?