HUD Practice Exam/89 Questions with
Complete Solutions
Which document is most important when working with a client to develop an
initial budget as part of a Client Action Plan? - -List of Assets
Retirement plan statement
Pay stub X
Current lease
-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?
- -
-A credit report may contain which information? - -Income history
Criminal record
# of accounts in collection status
A history of payments on an elctric bill
-A credit report contains inaccurate information. Which action item should
the counselor include in the Client Action Plan? - -FIle a dispute with the
appropaite 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 homeownership
program that only requires a 1% down payment with an FHA loan.
What might result from the client closing the credit card accounts? - -
-Which action would a client take to improve a credit score? - -
-A client does not receive a written monthly statement from the credit card
company. Which credit law could this omission violate? - -FCBA
-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%.
, The client asks the housing counselor if the offer is a case of illegal predatory
lending. How should the housing counselor respond? - -I am unable to
determine whether the loan is predatory but i suggest you shop around with
other ledning sources
-Which action should a counselor recommend a client take first after
discovering identity theft? - -File an identity theft report
-In which situation would a client's responsibilities, recurring costs, and
upfront costs be evaluated? - -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? - -Front End Ratio Formula
Conventional = <28%
-Which type of government insured loan was created for financing homes in
rural areas? - -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? - -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? - -Front End Ratio Formula
-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)? - -Debt to income ratio or back end ratio
-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? - -FHA
downpayment is at least 3.5%
-Under which condition would most down payment assistance programs
approve a waiver of the homeownership education requirement? - -Most will
not waive the homeownership education requirement
Complete Solutions
Which document is most important when working with a client to develop an
initial budget as part of a Client Action Plan? - -List of Assets
Retirement plan statement
Pay stub X
Current lease
-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?
- -
-A credit report may contain which information? - -Income history
Criminal record
# of accounts in collection status
A history of payments on an elctric bill
-A credit report contains inaccurate information. Which action item should
the counselor include in the Client Action Plan? - -FIle a dispute with the
appropaite 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 homeownership
program that only requires a 1% down payment with an FHA loan.
What might result from the client closing the credit card accounts? - -
-Which action would a client take to improve a credit score? - -
-A client does not receive a written monthly statement from the credit card
company. Which credit law could this omission violate? - -FCBA
-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%.
, The client asks the housing counselor if the offer is a case of illegal predatory
lending. How should the housing counselor respond? - -I am unable to
determine whether the loan is predatory but i suggest you shop around with
other ledning sources
-Which action should a counselor recommend a client take first after
discovering identity theft? - -File an identity theft report
-In which situation would a client's responsibilities, recurring costs, and
upfront costs be evaluated? - -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? - -Front End Ratio Formula
Conventional = <28%
-Which type of government insured loan was created for financing homes in
rural areas? - -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? - -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? - -Front End Ratio Formula
-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)? - -Debt to income ratio or back end ratio
-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? - -FHA
downpayment is at least 3.5%
-Under which condition would most down payment assistance programs
approve a waiver of the homeownership education requirement? - -Most will
not waive the homeownership education requirement
