HUD Practice Exam Questions and
Answers
1. Which document is most important when working with a client to
develop an initial budget as part of a Client Action Plan?: List of Assets
Retirement plan statement
Pay stub X
Current lease
2. A client would like 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?:
3. A credit report may contain which information?:
Income history Criminal record
# of accounts in collection status
A history of payments on an electric bill
4. A credit report contains inaccurate information. Which action item
should the counselor include in the Client Action Plan?: FIle a dispute with the
appropaite credit reporting agency
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,5. 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 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?:
6. Which action would a client take to improve a credit score?:
7. A client does not receive a written monthly statement from the
credit card company. Which credit law could this omission
violate?: FCBA
8. 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%.
The client asks the housing counselor if the offer is a case of illegal
predatory lending. How should the housing counselor respond?: I am unable to
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, determine whether the loan is predatory but i suggest you shop around with other ledning
sources
9. Which action should a counselor recommend a client take first
after discov- ering identity theft?: File an identity theft report
10. In which situation would a client's responsibilities, recurring
costs, and up- front costs be evaluated?: When weighing housing options
11. 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?: Front End Ratio Formula
Conventional = <28%
12. Which type of government insured loan was created for
financing homes in rural areas?: USDA
13. 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?:
Emergency Fund
14. A client has a monthly household income of $2,300, monthly
debt payments of $450, and an optimal monthly housing ratio of
32%. What is the client's optimal monthly housing payment?: Front End
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Answers
1. Which document is most important when working with a client to
develop an initial budget as part of a Client Action Plan?: List of Assets
Retirement plan statement
Pay stub X
Current lease
2. A client would like 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?:
3. A credit report may contain which information?:
Income history Criminal record
# of accounts in collection status
A history of payments on an electric bill
4. A credit report contains inaccurate information. Which action item
should the counselor include in the Client Action Plan?: FIle a dispute with the
appropaite credit reporting agency
1/
17
,5. 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 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?:
6. Which action would a client take to improve a credit score?:
7. A client does not receive a written monthly statement from the
credit card company. Which credit law could this omission
violate?: FCBA
8. 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%.
The client asks the housing counselor if the offer is a case of illegal
predatory lending. How should the housing counselor respond?: I am unable to
2/
17
, determine whether the loan is predatory but i suggest you shop around with other ledning
sources
9. Which action should a counselor recommend a client take first
after discov- ering identity theft?: File an identity theft report
10. In which situation would a client's responsibilities, recurring
costs, and up- front costs be evaluated?: When weighing housing options
11. 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?: Front End Ratio Formula
Conventional = <28%
12. Which type of government insured loan was created for
financing homes in rural areas?: USDA
13. 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?:
Emergency Fund
14. A client has a monthly household income of $2,300, monthly
debt payments of $450, and an optimal monthly housing ratio of
32%. What is the client's optimal monthly housing payment?: Front End
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17
