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HUD PRACTICE TEST
ACTUAL EXAM WITH CORRECT
SOLUTIONS.
Which document is most important when working with a client to develop an initial budget as part of a Client Action Plan? - correct answer- 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 answer- Find a second job
A credit report may contain which information? - correct answer- 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 1 / 3
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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 answer- It increases credit utilization, causing a negative impact on the credit score.
Which action would a client take to improve a credit score? - correct answer- 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 answer- 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 answer- "I am unable to determine whether the loan is predatory, but I suggest you shop around with other lending sources."
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Which action should a counselor recommend a client take first after discovering identity theft? - correct answer- File an identity theft report
In which situation would a client's responsibilities, recurring costs, and upfront costs be evaluated? - correct answer- 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 answer- $728
Which type of government insured loan was created for financing homes in rural areas? - correct answer- 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 answer- Emergency Funds
A client has a monthly household income of $2,300, monthly debt payments of $450, and an optimal monthly housing ratio of
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