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HUD Practice Test and Correct Answers
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HUD Practice Test and Correct Answers
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HUD Practice Test and Correct AnswersWhich document is most important when working with a client to develop an initial budget as part of a Client Action
Plan? - correct answers Pay Stub
A client would like to 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? - correct answers Find a second job
A credit report may contain which information? - correct answers The number of accounts in collection status
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 homeownership
program that only requires a 1% down payment with an FHA
loan. What might result from the client closing the credit card
accounts? - correct answers It increases credit utilization, causing a negative impact on the credit
score.
Which action would a client take to improve a credit score? - correct answers Pay delinquent accounts
A client does not receive a written monthly statement from the credit card company. Which credit law could this
omission violate? - correct answers Fair Credit Billing Act
A client shopping for a mortgage loan presents a housing counselor with an offer from a local mortgage lender. The
interest rate on the offer is 7.5% for a 30-year fixed rate mortgage with a 20% down payment required. The counselor
reviews the client file and determines the client's credit score is 725 and the client's total debt-to-income ratio is 20%. -
, correct answers "I am unable to determine whether the loan is predatory, but I suggest you shop around with other
lending sources."
Which action should a counselor recommend a client take first after discovering identity theft? - correct answers File an
identity theft report
In which situation would a client's responsibilities, recurring costs, and upfront costs be evaluated? - correct answers
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? - correct answers $728
Which type of government insured loan was created for financing homes in rural areas? - correct answers USDA
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? - correct answers Emergency Funds
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? - correct answers $736
Use Front-End Ratio
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)?
- correct 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? - correct answers $1,750
Under which condition would most down payment assistance programs approve a waiver of the homeownership
education requirement? - correct answers Most will not waive the homeownership education requirement.
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