Financial Literacy for Home Loan Qualification Quiz

Test your knowledge on mortgage finance with this quiz. Explore home loan qualification factors, APR, PMI, DTI, and more!

Practice Learn Test

Which of the following factors is not typically considered in home loan qualification?

Credit Score

Employment History

Marital Status

Debt-to-Income Ratio

What does APR stand for in the context of home loans?

Annual Percentage Rate

Adjusted Property Revenue

Asset Protection Ratio

Average Payment Requirement

What does LTV stand for in the context of home loans?

Loan-to-Value

Loan-to-Volume

Lender-to-Value

Lender-to-Volume

What is a down payment in the context of home buying?

A fee paid to the real estate agent

A fee paid to the home inspector

A portion of the purchase price paid upfront by the buyer

A fee paid to the lender for processing the loan

What does PITI stand for in the context of home loans?

Principal, Interest, Tax, Insurance

Property, Income, Tax, Insurance

Principal, Insurance, Tax, Interest

Payment, Interest, Tax, Insurance

Which of the following is true about a fixed-rate mortgage?

Interest rate remains constant for the entire loan term

Interest rate changes periodically based on market conditions

Interest rate is initially fixed but can change later

Interest rate is determined by the borrower's credit score

What is Private Mortgage Insurance (PMI)?

Insurance protecting the homeowner in case of natural disasters

Insurance protecting the lender in case the borrower defaults

Insurance covering the entire loan amount

Insurance covering the down payment

What is the difference between a conventional mortgage and an FHA loan?

Conventional mortgages require a higher down payment than FHA loans.

FHA loans are only available to first-time homebuyers.

Conventional mortgages are insured by the government, while FHA loans are not.

FHA loans have stricter credit score requirements than conventional mortgages.

What is a prepayment penalty in the context of home loans?

A fee charged if the borrower pays off the loan early

A fee charged if the borrower misses a payment

A fee charged if the borrower refinances the loan

A fee charged if the borrower applies for a home equity loan

#10

What is the Debt-to-Income (DTI) ratio used for in the context of home loan qualification?

To assess the value of the property

To determine the interest rate

To evaluate the borrower's ability to manage monthly payments

To calculate the down payment

#11

What is the typical length of a standard home loan term?

15 years

20 years

25 years

30 years

#12

What is a jumbo mortgage?

A mortgage with a very low interest rate

A mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac

A mortgage with no down payment required

A mortgage specifically designed for investment properties

#13

What is a balloon mortgage?

A mortgage with a fixed interest rate for a certain period, followed by adjustable rates

A mortgage with a large final payment due at the end of the loan term

A mortgage with no down payment required

A mortgage specifically designed for luxury properties