Freddie mac - credit smart exam questions and answers
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Freddie mac -
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Freddie mac - credit smart exam questions and answers/Freddie mac - credit smart exam questions and answers/Freddie mac - credit smart exam questions and answers
Freddie mac - credit smart exam questions and answers
The percentage of your gross monthly income that goes toward paying for your housing
expenses is called the "housing expense ratio" and is based on the total housing payment,
which includes: - correct answer Principal, interest, property taxes, homeowner's insurance,
mortgage insurance, homeowner's or condo association fees
Lenders don't include your future housing payment in your debt-to-income ratio, only all other
outstanding debts. - correct answer False
The principal amount is the total amount borrowed. - correct answer True
Do lenders use gross income or net profits when calculating mortgage affordability for self-
employed borrowers? - correct answer Net profits
An escrow account is a special account managed by the borrower that holds funds for property
taxes and property insurance payments. - correct answer False
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. -
correct answer True
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. - correct answer True
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
, Freddie mac - credit smart exam questions and answers
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.
--Getting gift funds from a family member.
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