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HUD CERTIFICATION QUESTIONS AND ANSWERS
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HUD CERTIFICATION QUESTIONS AND ANSWERS
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HUD CERTIFICATION QUESTIONS AND ANSWERSWhich document is most important when working with a client to develop an initial
budget as part of a Client Action Plan?
Pay stub
Retirement plan statement
List of assets
Current lease - Answers -Pay stub
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
-$806
-$936
-$1,118 - Answers -$728
Which type of government insured loan was created for financing homes in rural areas?
-VA
-Fannie Mae
-FHA
-USDA - Answers -USDA
Which type of assistance administered by a public housing authority allows for location
flexibility. 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 fund
-Line of credit
-Payday loan
-Retirement savings account - Answers -Emergency fund
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?
-$592
-$736
-$880
-$1,186 - Answers -$736
,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)?
-29%
-30%
-31%
-32% - Answers -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
-$2,250
-$4,500
-$5,250 - Answers -$1,750
Under which condition would most down payment assistance programs approve a
waiver of the home-ownership education requirement?
-Most will not waive the home-ownership education requirement
-When the home-buyer has successfully passed a home-ownership exam
-When the home-buyer has a verifiable disability or handicap
-When the home-buyer has completed four years of college - Answers -Most will not
waive the home-ownership education requirement
Which type of assistance administered by a public housing authority allows for location
flexibility?
-USDA
-FHA
-Project-based vouchers
-Tenant-based vouchers - Answers -Tenant-based vouchers
A client's payment history affects which factor of creditworthiness?
-Collateral
-Capacity
-Character
-Capital - Answers -Character
, Which action may a lender take to determine a borrower's character?
-Calculate housing ratios to see debt obligations.
-Examine pay stubs to determine amount of income.
-Review the appraisal.
-Call an employer to verify employment. - Answers -Call an employer to verify
employment.
A client would like 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
Borrow from retirement fund
Sell major assets
Find a temporary job through a staffing service - Answers -Find a second job
A credit report may contain which information?
The number of accounts in collection status
A history of payments on an electric bill
Income history
Criminal record - Answers -The number of accounts in collection status
A credit report contains inaccurate information. Which action item should the counselor
include in the Client Action Plan?
-Attach a letter to mortgage applications explaining the inaccuracies.
-Investigate the reasons why the inaccuracies occurred to determine the responsible
party.
-Include a personal consumer statement on the credit report.
-File a dispute with the appropriate credit reporting agency. - Answers -File a dispute
with the appropriate credit reporting agency.
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 home-ownership program that only requires a 1% down payment with an
FHA loan.
What might result from the client closing the credit card accounts?
-It decreases credit utilization, causing a negative impact on the credit score.
-It increases credit utilization, causing a negative impact on the credit score.
-It increases credit utilization, causing a positive impact on the credit score.
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