#1
What is the recommended percentage of your income to allocate towards housing expenses?
20-25%
ExplanationTypical range for housing expense allocation.
#2
What does PMI stand for in the context of homeownership?
Private Mortgage Insurance
ExplanationInsurance protecting lender against default.
#3
What is the purpose of a home inspection?
To evaluate the home's condition
ExplanationAssesses property's physical state.
#4
Which type of insurance protects homeowners against losses due to fire, theft, or other covered events?
Homeowners insurance
ExplanationCoverage against specified perils.
#5
What is an escrow account used for in homeownership?
To pay property taxes and insurance on behalf of the homeowner
ExplanationManages tax and insurance payments.
#6
Which of the following factors affects your credit score?
All of the above
ExplanationVarious factors contribute to credit score.
#7
What is the purpose of a home appraisal?
To estimate the market value of the home
ExplanationDetermines property's market worth.
#8
What is the debt-to-income ratio used for in the context of mortgage lending?
To assess the borrower's ability to repay the loan
ExplanationEvaluates borrower's repayment capability.
#9
Which of the following is NOT typically considered a closing cost when purchasing a home?
Real estate agent commission
ExplanationUsually paid by the seller.
#10
What is the 28/36 rule used for in the context of mortgage lending?
To assess the borrower's debt-to-income ratio
ExplanationGuideline for loan eligibility.
#11
What is an advantage of a fixed-rate mortgage compared to an adjustable-rate mortgage?
Predictable monthly payments
ExplanationMonthly payments remain constant.
#12
What is the minimum credit score typically required to qualify for a conventional mortgage?
620
ExplanationBaseline credit score requirement.
#13
What is the purpose of a home equity loan?
To borrow against the equity in a home
ExplanationAccessing home equity as loan.
#14
Which of the following factors can impact your mortgage eligibility?
All of the above
ExplanationVarious factors affect eligibility.
#15
What is the purpose of a home equity line of credit (HELOC)?
To borrow against the equity in a home
ExplanationFlexible credit line using home equity.