2. Mortgage and Loan Qualification Quiz

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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?

36% Signup and view all the answers

What does LTV stand for in mortgage and loan terms?

Loan-To-Value Signup and view all the answers

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

VA Loans Signup and view all the answers

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

Checking their Gross Monthly Income and monthly obligations Signup and view all the answers

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

A tri-merge credit report Signup and view all the answers

Which loans do NOT follow FNMA or FHLMC guidelines?

Non-conforming loans Signup and view all the answers

What does PMI stand for?

Private Mortgage Insurance 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?

Back-End Ratio Signup and view all the answers

What does FHA stand for?

Federal Housing Administration Signup and view all the answers

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

The amount of cash and liquid assets in their accounts Signup and view all the answers

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

'Credit invisibles' with no traditional credit history Signup and view all the answers

2. Mortgage and Loan Qualification Quiz

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