Exam (elaborations)
Freddie Mac - Credit Smart Exam 2024
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Freddie Mac - Credit Smart Exam 2024
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Freddie Mac - Credit Smart Exam 2024A Home Equity Line of Credit is: CORRECT ANSWER: A revolving line of credit that
is secured against your home. You can borrow money up to the amount that is approved
and pay it back and reborrow as many times as you need during the term of the loan and
use the funds for any purpose.
Routine home maintenance refers to tasks that keep things running smooth and
efficient in a home. CORRECT ANSWER: True
When searching for a contractor, you need to only get one bid and you should pay the
contractor the full amount before the work starts. CORRECT ANSWER: False
Acceptable sources of capital include: CORRECT 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): CORRECT 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. CORRECT ANSWER: False
Lenders consider four primary factors when determining whether to approve a loan -
the 4 C's of lending. What are they? CORRECT ANSWER: Credit, Capacity, Capital
and Collateral
Derogatory information on your credit report may include: collections, judgements,
bankruptcies and/or late payments. CORRECT 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. CORRECT
ANSWER: False
The home inspection is ordered through the lender and determines the market value of
the home. CORRECT ANSWER: False
Manufactured homes are the same as mobile homes and don't need to meet federal
construction and safety standards. CORRECT ANSWER: False
If you make extra payments on your loan, that can help pay down the principal faster
and thus greatly reduce the interest due on the loan. CORRECT ANSWER: True
, Government insured loans, such as FHA loans, are the only low down payment
mortgages available to homebuyers. CORRECT ANSWER: False
A fixed-rate mortgage is a loan where the interest rate stays the same for the life of the
loan. CORRECT ANSWER: True
Which of the following loans are guaranteed by the federal government (select all that
apply): CORRECT ANSWER: VA, USDA, FHA
There may be special loan products and first-time homebuyer or affordable
homeownership programs available in your community and it's worth calling your local
lenders, credit unions and housing counseling agencies to find out about your options.
CORRECT ANSWER: True
What percentage of the purchase price is required as a down payment for conventional
conforming loans to avoid paying private mortgage insurance? CORRECT ANSWER:
20%
Private mortgage insurance protects the borrower if they can't make their mortgage
payment. CORRECT ANSWER: False
It's okay to borrow money from a family member for your down payment, as long as you
pay the family member back. CORRECT ANSWER: False
You will need to repay the seller any property or school taxes that they have already paid
on the property. CORRECT ANSWER: True
LTV stands for loan-to-value and indicates the amount of the loan you owe as a
percentage of the value of the property. CORRECT ANSWER: True
The Annual Percentage Rate (APR) is the same as the interest rate. CORRECT
ANSWER: False
The mortgage loan process occurs in the following order: CORRECT ANSWER: Pre-
qualification or pre-approval, loan application, loan processing, loan underwriting, loan
approval or denial.
Making pre-payments (also called principal-only payments) can help you pay off your
loan sooner and potentially save you thousands of dollars in interest payments.
CORRECT ANSWER: True
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.
CORRECT ANSWER: True
Select all that apply. If you can't qualify for a loan on your own, you may have other
options, including: CORRECT ANSWER: --Finding a co-signer.
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