Section 22 unit 3 exam

The minimum down payment for an FHA 203(b) loan is ______. A. 12% B. 2% C. 3.5% D. 7.5%

3.5%

How does the FHA control the use of 203(k) money loaned for repairs to a home? A. A cost estimate must be provided prior to loan approval, and repairs are approved by an FHA inspector when completed. B. No money for repairs is released until the work is completed and approved by an FHA inspector. C. No money is released until the work is complete and a new appraisal confirms the market value of the home. D. The homeowner must use an FHA-approved contractor to designate and complete the repairs.

A cost estimate must be provided prior to loan approval, and repairs are approved by an FHA inspector when completed.

On an FHA 203(k) loan, the combined cost of home value and rehab must ______. A. Be less than $3,000 over the current appraised value of the home B. Fall within the FHA mortgage limit for the area where the property is located C. Not exceed 10% of the mortgage value D. Not exceed a loan-to-value ratio of 96.5%.

Fall within the FHA mortgage limit for the area where the property is located

The interest rate on an FHA Section 251 adjustable rate mortgage will ______. A. Always go down or stay the same each year B. Always go up or stay the same each year C. Go up or down, but can't change more than a maximum number of points allowed by the FHA over the life of the loan D. Go up or down, but can't exceed a two-percentage-point change over the life of the loan

Go up or down, but can't change more than a maximum number of points allowed by the FHA over the life of the loan

The Federal Housing Administration's loan program is designed for borrowers who ______. A. Have a minimal down payment and less than stellar credit B. Have nothing saved for a down payment C. Have stellar credit D. Need their loan guaranteed

Have a minimal down payment and less than stellar credit

What's a key feature of the Federal Housing Administration's loan program? A. Insures lenders against loss from borrower default B. Prevents lenders from foreclosing on homes when buyers default C. Provides homeowner insurance to low-income homebuyers D. Provides mortgage assistance to borrowers in danger of default

Insures lenders against loss from borrower default

Lucas would like to be a homeowner, but his low credit score makes lenders unwilling to give him a mortgage. What makes the 203(b) loan a more likely option for Lucas to qualify for a mortgage? A. He can skip a certain number of payments without penalty B. It has less stringent qualifying requirements than a conventional loan. C. It is an interest-only loan. D. Lenders don't review credit history or scores for this loan.

It has less stringent qualifying requirements than a conventional loan.

The Addams family has an FHA-insured loan. The family's mortgage payment has a fixed interest rate, but after the first five years, the rate will adjust annually. Which FHA loan insurance program are they using? A. Section 203(b) B. Section 203(k) C. Section 251 D. Section 264

Section 251

The FHA is part of ______. A. The Consumer Finance Protection Bureau B. The Department of Housing and Urban Development C. The Federal Deposit Insurance Corporation D. The MLO

The Department of Housing and Urban Development

Carla and Sven have a previous foreclosure, but now they are a few years away from that. They make good money with their jobs, and have about $30,000 available to use for a down payment and closing costs. Why might they consider an FHA 203(b) loan, even if they have sufficient down payment for a conventional loan? A. An FHA loan puts them in a better negotiating position with the seller. B. Past foreclosures are not considered when qualifying borrowers for a 203(b) loan. C. The FHA will pay their mortgage insurance for the life of the loan. D. The lender can consider compensating factors, even if their credit history isn't great.

The lender can consider compensating factors, even if their credit history isn't great.

Which of the following statements is true about government loans? A. They originate in the secondary market. B. They're insured or guaranteed by a government agency. C. They're serviced by the U.S. Department of the Treasury. D. They're underwritten by the Federal Reserve.

They're insured or guaranteed by a government agency.

Why might a homebuyer use an FHA 203(k) loan instead of the standard 203(b) loan? A. To create a loan-to-value ratio that's more acceptable to the lender B. To reduce the amount of the MIP paid on the loan C. To roll the cost of rehabilitating the purchased home into the mortgage D. To shorten the term of the mortgage loan

To roll the cost of rehabilitating the purchased home into the mortgage