HUD Housing Counselor Certification Practice Exam Solved 100%

What is the maximum percent of area median income allowable for a household to qualify for a Housing Choice Voucher? - Answer 50% Which is the maximum recommended housing ratio for renting an apartment? - Answer 30% Eligibility requirements for down-payment assistance programs include which factors? - Answer Income, home-buyer education, purchase price The client is considering an FHA mortgage. What is the upfront mortgage insurance premium (UFMIP) for an FHA mortgage? - Answer 1.75% If the client was denied a mortgage loan and the lender told him to come back after his divorce had been final for three years, what is the best advice for the housing counselor to provide to the client to report a violation to ECOA? - Answer Contact the Federal Trade Commission as the lender's action might violate the Equal Credit Opportunity Act A question from a lender on the client's Medical History would be inappropriate or appropriate? - Answer Inappropriate Who is responsible for educating home-buyers about their rights? - Answer Housing Counselor In order to minimize the impact on the client's credit score, what is the maximum time frame within which the client should apply for pre-approval from multiple lenders? - Answer A 30-day period What are the responsibilities of a home inspector? - Answer Examine mechanical systems, Evaluate the condition of a home, Identify items to be repaired or replaced Which is the best reason that a housing counselor would suggest that a client speak to three to five different lenders? - Answer To compare loan estimates Which is the best advice that a housing counselor can give the client to protect against identity theft? - Answer Review credit report at least once per year The client tells the lender that he is expecting a raise soon. Should the Lender provide a Loan Estimate (LE) with, or without factoring the raise? - Answer Provide a loan estimate without factoring in the raise If this client obtains a mortgage of $100,000, typically, how much should he expect to pay for closing costs? - Answer $3000 to $4000 Is Application Fee an upfront cost of clients who are considering renting or buying a property? - Answer Renting A client wants to customize his home with do-it-yourself projects, this is an indication the client is best aligned with which housing option; Home-ownership or Renting? - Answer Home-ownership The client's gross monthly income is $4167 and the monthly debts are $435. What is the maximum mortgage payment (rounded to the nearest dollar) for which this client would qualify using a standard conventional loan? - Answer $1,065 NOTE: The maximum front-end ratio for a standard conventional loan is 28%, and the back-end ratio is 36%. The front-end ratio is calculated as 28% of the client's monthly income of $4,167, which is $1,167. The back-end ratio is calculated as 36% of the client's monthly income of $4,167 minus the client's monthly debt of $435, which equals $1,065. Therefore, the maximum loan payment that the client qualifies for is the lower of the two numbers, which is $1,065. Which is the maximum debt-to-income ratio allowable for an FHA loan? - Answer 43% Which is the maximum debt-to-income ratio allowable for an FHA Energy Efficiency Mortgage loan? - Answer 45% The client's gross monthly income is $4167 and the monthly debts are $435. With a monthly mortgage payment of $950, which is the client's debt-to-income ratio (round to the nearest whole percent)? - Answer 33% The client's gross monthly income is $4167 and the monthly debts are $435. If the client seeks an FHA Energy Efficient Mortgage (EEM) loan, what is the maximum housing payment for which he can qualify (rounded to the nearest dollar)? - Answer $1,292 On which factor is a borrower's annual mortgage insurance premium (MIP) based? - Answer Current principal balance NOTE: The annual mortgage insurance premium (MIP) is based on the unpaid principal balance of the loan. The loan-to-value ratio is used to determine when private mortgage insurance (PMI) can be dropped from the loan. Credit scores do not affect MIP but might affect PMI. Which is the upfront mortgage insurance premium (UFMIP) if the client purchases a home with an FHA loan amount of $116,000? - Answer $2,030 The client only tracks bill payments. Which should the housing counselor recommend to help the client begin planning for a home purchase? A- Continue to track bill payments only B- Track income only C- Track all income and expenses D- Track savings deposits and expenses - Answer C- Track all income and expenses How should a client apply for the Housing Choice Voucher Program? - Answer Contact the local Public Housing Authority Which website provides information on programs to assist home-buyers with down payment assistance? - Answer HUD.gov Based on the client's income of $56,400 per year of, savings of 12,000 toward a down payment, and credit score of 700, which mortgage option is likely best for her; Conventional loan, FHA loan, USDA Rural Development loan, or Subprime loan? - Answer Conventional loan This client is denied a loan to purchase a home because she has not lived in the country for at least ten years. Which Act is this adverse action violating, and where should the client report this action to? - Answer Report the action to the Federal Trade Commission, it is a violation of the Equal Credit Opportunity Act If the client submits a loan application, which document should she receive within three business days? - Answer Loan Estimate What is a pre-approval from a lender? - Answer When the lender commits to lend a fixed amount based on a review of the client's application. A client has been a paralegal for five years and earns $56,400 per year. She has been working part-time at an ice cream parlor for the past few summers to save for her first home. Now that she has saved $12,000 toward a down payment, she no longer needs to work a second job. In the next three months, the client would like to buy a single-family home near a good school for less than $150,000. Does this client meet a lender's expectation for continued employment? - Answer Yes, because the client has been at her job over two years In reviewing a loan estimate, the housing counselor finds fees for services that seem unnecessary. What is the most likely explanation for these fees? Choose one: A- Predatory lending practices B- Subprime mortgage terms C- Regional lending considerations D- Variation in lending practices - Answer A- Predatory lending practices The client thinks her cost of living is going to be the same because her mortgage payment and her rental payment are comparable. What are three recurring costs associated with home-ownership that are not part of home rental? A- Homeowners insurance, property taxes, home repairs B- Property taxes, renters insurance, utility bill C- Utility bill, car insurance, renters insurance D- Car insurance, property taxes, cable bill - Answer Homeowners insurance, property taxes, home repairs Which additional information should the housing counselor request from the client to determine her readiness to purchase a home? Choose One: A- Planned family size B- Current lease C- Pre-qualification letter D- Expenses - Answer D- Expenses A client has been a paralegal for five years and earns $56,400 per year. She has been working part-time at an ice cream parlor for the past few summers to save for her first home. Now that she has saved $12,000 toward a down payment, she no longer needs to work a second job. In the next three months, the client would like to buy a single-family home near a good school for less than $150,000. What is this client's maximum mortgage payment if the lender's housing ratio is 28 percent (round to the nearest dollar)? - Answer $1,316 Which is the minimum percentage of the purchase price that the client needs to make as a down payment to avoid having to pay mortgage insurance with a conventional mortgage? - Answer 20% Which factor determines whether the client will have to pay private mortgage insurance versus mortgage insurance premium? A- Size of loan B- Credit score C- Type of loan D- Loan-to-value ratio - Answer C- Type of loan The client would like to purchase a single-family home. Prices in the area where she would like to live are around $450,000. She has $45,000 left from the life insurance settlement and she has saved an additional $5,000. She typically saves $500 per month, but when she has unexpected expenses she is unable to save. Because she takes her children to school, she usually stops on her way to work for breakfast. A- Earned Income Tax Credit B- Child and Dependent Care Tax Credit C- Energy tax credit D- Educational tax credit - Answer B- Child and Dependent Care Tax Credit The client currently keeps the $45,000 remaining from the life insurance settlement in a regular checking account. Her goal is to use this money towards her down payment. Which action should the housing counselor suggest to this client? A- Move the funds into a mutual fund B- Move funds to a large purchase savings account with limited accessibility C- Leave the money in her current checking account for easy access D- Move funds into a long-term Certificate of Deposit - Answer Move funds to a large purchase savings account with limited accessibility The client wants to move her family to a lower-priced rental unit to save money for a home, but is struggling with the upfront fees required to move to a new apartment complex. Which strategy would be most effective to help the client secure affordable housing and cover moving expenses quickly? A- Submit application for a housing voucher B- Find an individual landlord and negotiate C- Save for the move instead of paying utilities D- Apply for a loan to cover expenses - Answer Find an individual landlord and negotiate Which type of lease and tenancy best protects the tenant? A- An oral lease with tenancy at will B- A written lease with contractual tenancy C- A written lease with tenancy at will D- An oral lease with tenancy at sufferance - Answer A written lease with contractual tenancy The client wants to purchase a new home, but her lease might expire before she can move into it. Which is the best advice for the housing counselor to provide? A- Discuss a tenancy-at-sufferance agreement with the current landlord B- Stay in her current unit until the landlord evicts her C- Find a seller who will allow her to move in before closing D- Contact local Public Housing Agencies - Answer A- Discuss a tenancy-at-sufferance agreement with the current landlord Which tactic would be most effective for the client to encourage a positive landlord-tenant experience during a tenant initiated early lease termination? A- Stop paying rent immediately B- Request return of the security deposit C- Leave furniture for an incoming tenant D- Communicate well with the landlord - Answer D- Communicate well with the landlord Which additional information would the housing counselor need to prepare the action plan for this client? A- Documentation of life insurance payout B- Client's current lease agreement C- Documentation of household expenses D- Listings for properties the client is interested in purchasing - Answer Documentation of household expenses Which is the best recommendation the housing counselor should give this client to help improve her credit score? A- Set up automatic credit card and loan payments to ensure on time payment B- Apply for a loan to consolidate the credit card and auto loan balances C- Apply for a credit card with a lower interest rate and transfer the balance of the current card D- Pay more than the minimum payment each month to reduce the credit card balance - Answer D- Pay more than the minimum payment each month to reduce the credit card balance Which factor would most likely impact the client's housing affordability in the future? A- A reduction in income when the survivor benefit runs out when children turn 18 B- The need for a second car when the children start to drive C- Selecting a 30-year fixed rate mortgage versus a 15-year fixed rate mortgage D- The cost of home repairs and maintenance - Answer A- A reduction in income when the survivor benefit runs out when children turn 18 The client currently pays $2,050 in rent, though her mortgage payment could be higher. Which is the most effective strategy to be able to manage a higher payment? A- Withdraw retirement account funds to pay down car and credit card balances B- Delay home purchase until the car loan is paid off C- Consolidate car loan and credit card balances D- Utilize savings to pay the mortgage in the future - Answer B- Delay home purchase until the car loan is paid off Which was instituted by Congress to better protect home-buyers following the most recent housing crisis? A- Federal Trade Commission B- National Mortgage Settlement C- Consumer Finance Protection Bureau D- Truth In Lending Act - Answer C- Consumer Finance Protection Bureau Which initiative encourages housing counseling agencies to advocate that lenders operate in underserved areas? A- Affirmatively Furthering Fair Housing B- Fair Housing Initiatives Program C- Fair Housing Testing Program D- Fair Housing Assistance Program - Answer A- Affirmatively Furthering Fair Housing Which action taken by a housing counseling agency would affirmatively further fair housing? A- Report potential violations to the local fair housing authority B- Create an outreach campaign designed to raise awareness about critical housing topics C- Accompany clients when viewing properties to ensure they are treated fairly D- Discourage tenants from seeking housing with landlords who appear to consistently engage in discriminatory practices - Answer B- Create an outreach campaign designed to raise awareness about critical housing topics Which section of a credit report shows a client's payment history? - Answer Account information Which is the maximum payment (rounded to the nearest dollar) for principal, interest, taxes, insurance, and association fees (PITIA) this client can afford according to FHA back-end ratio guidelines? Assets, $58200, Total Gross Monthly Income $6400 Debt Expenses $615, Household Expenses $4679 - Answer $2137