Freddie Mac CreditSmart Homebuyer U Practice Test

These questions are part of the practice quiz. Start practicing

• What is the range of a FICO score considered to be good?
• Who typically pays the commission for real estate agents?
• What are property taxes imposed on by the local government?
• What is typically included in a monthly housing payment?
• Should a borrower avoid signing any documents they do not understand?
• Which of the following is likely to be assessed when determining a borrower's creditworthiness?
• When seeking a contractor for home repairs, what is the recommended practice regarding bids?
• What does a good credit score typically indicate?
• What is a potential consequence of not having an escrow account?
• What is the correct order of the mortgage loan process?
• What does having adequate cash reserves indicate to a lender?
• Is the choice of neighborhood more important than the actual home purchase?
• What is the purpose of a home inspection?
• Are government insured loans the only low down payment mortgages available to homebuyers?
• What does amortization imply in the context of a mortgage?
• Which of the following is a red flag indicating a Home Improvement Loan Scam?
• What is the role of a lender regarding home inspections?
• What is the result of a Home Improvement Loan Scam?
• Can buyers request items to transfer with the home purchase?
• Which of the following reasons may prompt a lender to consider when providing a home loan?
• What is a significant benefit of attending homebuyer education courses?
• What income do lenders typically use for calculating mortgage affordability for self-employed borrowers?
• Is it advisable to sign a loan document that has blank lines?
• If a buyer has a fixed-rate mortgage, what aspect of the payment will remain unchanged?
• What is the purpose of a seller’s disclosure?
• What is an implication of having cash reserves for a mortgage?
• Is it true that routine home maintenance is essential for keeping a home efficient?
• What does it mean if a borrower pays principal-only payments?
• How long does the closing process typically last?
• What are the benefits of making pre-payments on a mortgage?
• What is an interest rate?
• Do lenders have guidelines or restrictions regarding the home you want to purchase if you have good credit?
• Which document outlines the terms and conditions of a mortgage loan?
• What is the purpose of the final walk-through for home buyers?
• Which of the following statements about the Annual Percentage Rate (APR) is true?
• What is a common requirement for lenders to manage payment of property taxes and insurance?
• Why is it important to review your credit report before applying for a mortgage?
• Which items should be included in an emergency kit?
• Do lenders include future housing payments in the debt-to-income ratio?
• In regards to mortgage calculations, do lenders consider your future housing payments?
• Which of the following is NOT included in your PITIA payments?
• What is the primary difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?
• What role does a real estate agent play in the homebuying process?
• Is it permissible to borrow money from family for a home down payment?
• What is true about negative amortization?
• What can help future homebuyers manage their finances effectively?
• What are contingencies in a real estate deal?
• What type of items are commonly requested to convey with a home purchase?
• Are all perils included in homeowner's insurance policies?
• What types of investments do lenders consider?
• Which property ownership structure allows an owner's share to pass to others upon death?
• Which option would be an effective way to track savings for a down payment?
• What are potential consequences of foreclosure?
• Which factor is important when considering a mortgage?
• True or False: Individuals with student loan debt cannot become homeowners.
• What does the term 'gross monthly income' refer to?
• What is a Home Equity Line of Credit (HELOC)?
• Which statement is true about PMI?
• What does a larger down payment typically allow a homebuyer to do?
• Is it important to inquire about local homeownership programs?
• What does a home appraisal determine?
• What is a home warranty?
• True or False: The approval process for a mortgage is typically quick and requires minimal documentation.
• What is the main benefit of a fixed-rate mortgage in a changing market?
• Does an appraisal substitute for a home inspection?
• What impact does a pre-payment penalty have on a loan?
• What is home equity?
• What is the implication of property taxes changing over the life of a mortgage?
• What financial situation could require speaking with a HUD-certified housing counselor?
• What does earnest money typically indicate in a real estate transaction?
• What is a common reason for a contingency in a home purchase agreement?
• Why is understanding your credit score important in the homebuying process?
• When should a borrower dispute an error on their credit report?
• What can real estate agents assist homebuyers with?
• What gives assurance that property taxes and home insurance are paid on time?
• Which of the following is a typical requirement to qualify for a mortgage?
• What should be included in an emergency fund related to homeownership?
• What is the purpose of a home inspection during the buying process?
• What is a down payment in relation to home buying?
• Which factor should be considered when selecting a home location?
• What should a buyer do if they suspect issues during the final walk-through?
• What is the first step in the homebuying process?
• Which of the following are components of home safety practices?
• What is true about the principal amount of a loan?
• How does the housing market directly influence home prices?
• Are manufactured homes subject to federal construction and safety standards?
• What do closing costs typically include?
• Can PITIA payments change each year with a fixed-rate mortgage?
• What does LTV stand for in mortgage lending?
• Does having good credit always exempt you from lender restrictions?
• What describes negative amortization?
• Which of the following options can help homebuyers with their down payment?
• What is the potential downside of not performing routine home maintenance?
• What is a Short Sale in real estate?
• What is one reason to maintain an emergency fund when purchasing a home?
• Which of the following is NOT a benefit of making capital improvements to a house?
• What impact can extra payments on a loan have on overall interest paid?
• How can homebuyers potentially reduce their monthly mortgage payments?
• Which of the following is NOT typically included in closing costs?
• What role does a real estate agent play in the home buying process?
• How might climate change affect homeownership?
• What does it mean if a mortgage has a fixed rate?
• Which of the following is NOT a suggested option if you can't qualify for a loan on your own?
• Which types of loans are guaranteed by the federal government?
• What process allows another qualified buyer to take over your mortgage debt and payments?
• What does pre-approval provide that pre-qualification does not?
• What are PITIA payments comprised of?
• What best describes an escrow account?
• Is the Multiple Listing Service (MLS) available to the public?
• Which income concept is critical for determining mortgage eligibility?
• What should potential homebuyers consider when looking for loan products?
• When making a purchase offer, should you always offer less than the asking price?
• Which of the following factors is typically considered by lenders when determining mortgage eligibility?
• What is a major risk of borrowing more than one can afford?
• When is it crucial to contact FEMA for assistance?
• What is the primary purpose of a title search in real estate transactions?
• What is earnest money in a real estate transaction?
• What does PMI stand for, and when is it required?
• What is typically included in a loan estimate provided by a lender?
• What is a strategy for homebuyers who do not have a 20% down payment saved?
• What is a benefit of working with a real estate agent?
• Which of the following practices enhances home safety?
• What advantage do homeowners gain by making extra payments on their mortgage?
• What is the primary difference between pre-qualification and pre-approval in the mortgage process?
• What must you keep in mind when considering gift funds from a family member for a down payment?
• Is it commonly required for buyers to conduct a home inspection prior to finalizing a purchase?
• Who typically orders and pays for the home inspection?
• What does the loan-to-value ratio (LTV) represent?
• What does "capital" refer to in the context of a mortgage?
• How does budgeting benefit future homebuyers?
• Which of the following is a protected class under the Fair Housing Law?
• Which of the following is considered an acceptable source of capital?
• Is the statement "The principal amount is the total amount borrowed" true or false?
• Why is it important for a buyer to review documents before closing?
• What percentage of a credit score is based on the 'Amounts Owed' characteristic?
• What might be considered a red flag when lenders review employment stability?
• How does a good credit history benefit an individual?
• What is the term for the percentage of your gross monthly income used to cover housing expenses?
• What is the purpose of a contingency clause in a home purchase agreement?
• Is it beneficial to have funds caught up in an escrow account?
• Which factors can affect your credit score?
• What does it mean to "lock in" an interest rate?
• How many months' worth of expenses should an emergency fund ideally cover?
• What secures the mortgage loan?
• Is the statement "An escrow account is a special account managed by the borrower" true or false?
• Why is it important for consumers to be aware of online scams?
• What is the purpose of the Good Faith Estimate (GFE)?
• What is a Foreclosure Rescue Scam?
• What is one potential option if you can't qualify for a loan by yourself?
• What is a Home Title Scam?
• When buying a property, what must you repay the seller if they have already paid them?
• What defines a Post-Disaster Insurance Scam?
• What does a fixed-rate mortgage signify?
• How do lenders assess if you have adequate savings for obtaining a mortgage?
• In homeownership, what does 'equity' refer to?
• Is an escrow account managed by the borrower?
• What does it mean to shop for a mortgage?
• What percentage of the purchase price is required as a down payment for conventional conforming loans to avoid paying private mortgage insurance?
• If a borrower finds an error on their credit report, what should they do?
• What does the housing expense ratio include?
• What type of ownership structure allows equal property ownership among multiple people?
• What is the typical down payment percentage required for conventional loans?
• Why is having homeowners insurance important?
• What term relates to property used as a security for a debt or loan?
• What action might a loan servicer take to provide time for a homeowner to sell their home?
• Which documents should you have ready when applying for a mortgage?
• If a real estate agent performs well, does it mean no further research is needed by the homebuyer?
• Why is it important to assess your debt-to-income ratio?
• What characterizes a contingent offer in real estate?
• What action should NOT be taken immediately after a disaster?
• If a home inspector finds issues, what can the buyer do?
• What effect do extra payments on your loan have on the principal?
• How can homeowners build equity in their property?
• Which of the following is NOT considered an alternative to foreclosure?
• How can a higher down payment benefit homebuyers?
• What is a bank statement loan primarily intended for?
• One of the four C's of lending relates to a borrower's savings and investments. What is this characteristic called?
• Do real estate agents need to take a test to get licensed?
• What is one of the main reasons for reviewing estimated closing costs?
• What are possible consequences of missing mortgage payments?
• Contingencies in the homebuying process refer to what?
• What should not be included in an emergency kit?
• What describes the transfer of a home's title back to the loan servicer in exchange for debt cancellation?
• What should you do immediately when disaster strikes?
• What is the primary purpose of private mortgage insurance (PMI)?
• What are the four primary factors that lenders consider when determining whether to approve a loan?
• What can happen if the buyer is unhappy with the home inspection results?
• Why is the debt-to-income (DTI) ratio significant in mortgage applications?
• What is the primary purpose of the Freddie Mac CreditSmart program?
• Derogatory information on a credit report may include which of the following?
• If your loan application is denied, what are lenders required to provide by law?
• Which of the following does NOT contribute to increasing home equity?
• What may collections, judgments, and bankruptcies on your credit report indicate?