2. Mortgage and Loan Qualification Quiz
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Questions and Answers

What is the main purpose of a credit report for lenders?

  • To evaluate the borrower's payment practices and credit management (correct)
  • To analyze the borrower's social media activity
  • To assess the borrower's favorite food
  • To determine the borrower's favorite color
  • Which ratio compares total monthly housing expenses to gross monthly income?

  • Total Debt Ratio
  • Income-to-Expense Ratio
  • Capacity Ratio
  • Housing Ratio (correct)
  • Which is NOT one of the five C's of credit?

  • Collateral
  • Character
  • Capacity
  • Color (correct)
  • What is the maximum back-end ratio generally preferred by FNMA for 1st Mortgages?

    <p>36%</p> Signup and view all the answers

    What does LTV stand for in mortgage and loan terms?

    <p>Loan-To-Value</p> Signup and view all the answers

    Which type of loan does NOT require mortgage insurance because it is guaranteed?

    <p>VA Loans</p> Signup and view all the answers

    What is a good practice for determining a borrower's ability to repay a loan?

    <p>Checking their Gross Monthly Income and monthly obligations</p> Signup and view all the answers

    What is the critical document that lenders review to understand a borrower's credit management?

    <p>A tri-merge credit report</p> Signup and view all the answers

    Which loans do NOT follow FNMA or FHLMC guidelines?

    <p>Non-conforming loans</p> Signup and view all the answers

    What does PMI stand for?

    <p>Private Mortgage Insurance</p> Signup and view all the answers

    What is the term for the ratio that compares a borrower's total monthly debts to their gross monthly income?

    <p>Back-End Ratio</p> Signup and view all the answers

    What does FHA stand for?

    <p>Federal Housing Administration</p> Signup and view all the answers

    Which of the following is a factor in assessing a borrower's creditworthiness?

    <p>The amount of cash and liquid assets in their accounts</p> Signup and view all the answers

    What does the term 'non-traditional credit sources' refer to?

    <p>'Credit invisibles' with no traditional credit history</p> Signup and view all the answers

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