10 Questions
The debt to income ratio compares the buyer’s monthly income against the proposed monthly mortgage and all other regular debt payments.
True
A primary borrower and a co-borrower each have joint and several liability, meaning that a court may order either one responsible for paying the entire loan balance.
True
A person’s net worth equals his assets minus his liabilities.
True
To determine net equity, subtract the value of all liens and selling expenses from the property’s appraised value ($400,000 – $325,000 – $40,000 = $35,000).
False
A person’s credit history, in its narrower sense, describes how many years that person has been borrowing and repaying money.
True
Most lenders view a loan for a vacation home, a rental property, or a manufactured home as a greater risk.
True
A co-borrower is solely responsible for paying the entire loan balance.
False
Net worth is calculated by subtracting assets from liabilities.
True
Credit history includes information about how long a person has been borrowing money.
True
The Equal Credit Opportunity Act allows discrimination against loan applicants receiving income from public assistance.
False
Test your knowledge on major derogatory incidents listed on a credit report and how credit scores predict loan default likelihood. Learn about FICO® scores, income analysis, and the characteristics of income.
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