WorksheetsUnit 6 R.E
Total questions: 40
Worksheet time: 20mins
What is the main purpose of reviewing a borrower’s creditworthiness?
To determine property taxes
To evaluate lending risk
To set appraisal value
To calculate PMI
Which of the following is NOT one of the 4 C's of credit?
Character
Capacity
Capital
Credit Score
Which “C” of credit refers to a borrower's history of paying debts on time?
Capital
Collateral
Character
Capacity
A borrower's income compared to debt obligations best describes which factor?
Character
Capital
Capacity
Collateral
Savings, investments, and cash reserves are examples of:
Capital
Capacity
Collateral
Character
Which credit factor represents property pledged to secure a loan?
Capacity
Capital
Character
Collateral
What is the FICO score range used by lenders?
300 to 400
400 to 600
600 to 700
700 to 850
300 to 850
A higher FICO score generally results in:
Higher interest rates
Lower lending risk
Larger PMI payments
Shorter loan terms
Banks typically prefer borrowers to have a FICO score of at least:
600
650
700
720
What does APR represent?
Monthly interest charge
Total loan balance
Yearly cost of borrowing
Down payment amount
Which two factors most influence a borrower's APR?
A. Property taxes and insurance
B. Loan term and property value
C. Credit score and debt-to-income ratio
D. Appraisal and location
Which mortgage type usually requires 20% down to avoid PMI?
A. FHA
B. VA
C. Conventional
D. Adjustable-rate
Which loan is government-backed and allows low down payments for lower credit scores?
Conventional
FHA
Jumbo
VA
Which loan program is designed for military members and veterans?
FHA
Conventional
VA
USDA
A major benefit of a VA loan is:
Required PMI
High down payment
No PMI
Short loan term
PMI primarily protects:
The borrower
The lender
The real estate agent
The insurer
PMI is typically required when the down payment is less than:
10%
15%
20%
25%
Which formula is used to calculate PMI?
Loan x APR ÷ 12
Loan x 1% ÷ 12
Loan ÷ Value x 100
Debt ÷ Income
What does DTI stand for?
Debt-to-Income
Down-to-Investment
Debt-to-Interest
Down-to-Insurance
Which DTI percentage do lenders generally prefer or below?
25%
30%
36%
45%
Which formula correctly calculates DTI?
Income ÷ Debt × 100
Debt ÷ Income × 100
Loan ÷ Value × 100
Payment ÷ Income × 12
What does LTV compare?
Loan amount to income
Loan amount to property value
Loan term to interest rate
Income to debt
Which LTV percentage usually avoids PMI?
95%
90%
85%
80%
Which formula calculates LTV?
Loan ÷ Income × 100
Value ÷ Loan × 100
Loan ÷ Value × 100
Debt ÷ Income × 100
What does PITI stand for?
Principal, Interest, Taxes, Insurance
Payment, Interest, Taxes, Insurance
Property, Interest, Taxes, Insurance
Principal, Insurance, Term, Interest
Which part of PITI is the amount borrowed?
A. Interest
B. Taxes
C. Principal
D. Insurance
Property taxes are paid to the:
Bank
Insurance company
City or county
Federal government
Homeowners insurance protects against:
Loan default
Property damage
Interest rate increases
Credit loss
Which cost may be added when the down payment is less than 20%?
Taxes
Interest
PMI
Principal
Failure to make mortgage payments as agreed is called:
Refinancing
Foreclosure
Default
Appraisal
What is an appraised value?
Purchase price
Estimated market value
Loan balance
Insurance value
A down payment is best described as:
Monthly mortgage payment
Initial cash paid upfront
Annual tax payment
Interest charge
Which loan term is most common for mortgages?
5 years
10 years
15 or 30 years
40 years
Which insurance protects the lender rather than the borrower?
Flood insurance
Homeowners insurance
PMI
Earthquake insurance
An LTV of 72% generally means:
PMI is required
PMI is not required
Loan is denied
Interest rate increases
Which factor is most important when determining capacity?
Credit score
Property value
Income versus debt
Down payment
Which expense is NOT included in PITI?
Principal
Interest
PMI
Taxes
A borrower with strong credit and 20% down would most likely choose:
FHA loan
VA loan
Conventional loan
Adjustable loan
Which insurance may be required based on property location?
PMI
Flood insurance
Credit insurance
Mortgage insurance
Which calculation shows the total monthly mortgage obligation?
APR
LTV
PITI
DTI
