First-Time Homebuyer Quiz: Test Your Mortgage Process Knowledge

Getting Started Basics

Financial Preparation Quiz

Q1. What should you do first when preparing to buy a home?
a) Look at houses online
b) Check your credit score
c) Talk to a real estate agent
d) Apply for a mortgage

Correct Answer: b) Check your credit score

Explanation: Your credit score significantly impacts your mortgage approval chances and interest rate. Start by reviewing your credit report and addressing any issues.

Q2. How much should you ideally save before buying a home?

1. Down payment (3-20% of home price)
2. Closing costs (2-5% of loan amount)
3. Emergency fund (3-6 months of expenses)
4. Moving costs ($1,000-3,000)

Credit Score Essentials

Q3. What’s the minimum credit score typically needed for:

Conventional Loan:
a) 580
b) 620
c) 640
d) 680

FHA Loan:
a) 500
b) 580
c) 620
d) 640

Correct Answers:
Conventional: b) 620
FHA: b) 580

Savings Requirements Test

Q4. Calculate needed savings for a $300,000 home:

Down Payment Options:

• 3% = $9,000
• 10% = $30,000
• 20% = $60,000

Plus Estimated Additional Costs:

• Closing costs: $6,000-15,000
• Emergency fund: $10,000-15,000
• Moving expenses: $2,000-3,000

Pre-Approval Process

Documentation Quiz

Q5. Which documents do you need for pre-approval? (Check all that apply)

• [ ] Pay stubs (last 30 days)
• [ ] W-2 forms (last 2 years)
• [ ] Tax returns (last 2 years)
• [ ] Bank statements (last 2-3 months)
• [ ] Investment account statements

All above items are required

Income Verification

Q6. Match the income type with required documentation:

1. Salary Employment

• Pay stubs and W-2s

1. Self-Employment

• Tax returns and profit/loss statements

1. Rental Income

• Lease agreements and tax returns

1. Investment Income

• Account statements and tax returns

Pre-Approval vs. Pre-Qualification

Q7. Which statement is true about pre-approval?
a) It’s the same as pre-qualification
b) It requires detailed documentation
c) It guarantees a mortgage
d) It’s valid for one year

Correct Answer: b) It requires detailed documentation

Budgeting and Affordability

Monthly Payment Components

Q8. What does PITI stand for?

• P: Principal
• I: Interest
• T: Taxes
• I: Insurance

Q9. Calculate maximum monthly payment:

• Annual income: $75,000
• Monthly income: $6,250
• 28% rule maximum: $1,750
• 36% DTI maximum: $2,250

Hidden Costs Quiz

Q10. Which costs are often forgotten by first-time buyers? (Select all that apply)

• [ ] Private Mortgage Insurance (PMI)
• [ ] Home maintenance
• [ ] HOA fees
• [ ] Utilities
• [ ] Property tax increases

All of these are commonly overlooked costs

Debt-to-Income Assessment

Q11. Calculate your DTI ratio:
Monthly Income: $6,000
Monthly Debts:

• Car payment: $400
• Student loans: $300
• Credit cards: $200
• Proposed mortgage: $1,500

Total DTI = 40% (($400 + $300 + $200 + $1,500) ÷ $6,000)

Choosing Your Mortgage

Loan Types Quiz

Q12. Match the loan type with its main benefit:

1. Conventional

• Lower costs long-term

1. FHA

• Lower down payment requirements

1. VA

• No down payment for veterans

1. USDA

• Rural property financing

Down Payment Options

Q13. True or False: You always need 20% down to buy a house.

• False
  Explanation: Many loans allow much lower down payments, though 20% helps avoid PMI.

Interest Rate Factors

Q14. What affects your interest rate? (Rank 1-5 in importance)

• Credit score
• Down payment
• Loan term
• Loan type
• Market conditions

Working with Professionals

Lender Selection Quiz

Q15. What should you compare when shopping for lenders?
a) Interest rates only
b) Closing costs only
c) Total APR and fees
d) Monthly payment only

Correct Answer: c) Total APR and fees

Real Estate Agent Partnership

Q16. What should you look for in an agent? (Check all that apply)

• [ ] Experience with first-time buyers
• [ ] Knowledge of desired areas
• [ ] Responsiveness
• [ ] References
• [ ] Communication style

All these factors are important

Closing Process

Final Steps Quiz

Q17. Put these closing steps in order:

1. Home inspection
2. Appraisal
3. Title search
4. Final walk-through
5. Closing day

Common Pitfalls

Q18. Which actions should you avoid before closing?

• [ ] Changing jobs
• [ ] Opening new credit cards
• [ ] Making large purchases
• [ ] Moving money between accounts

Avoid all these actions before closing

Conclusion

Becoming a first-time homebuyer doesn’t have to be overwhelming. Use this quiz guide to understand the process, prepare adequately, and make informed decisions. Remember, proper preparation and understanding are key to a successful home purchase.

Frequently Asked Questions

1. How long does the entire home-buying process typically take?
   From pre-approval to closing, expect 2-3 months, though timing can vary based on market conditions and your preparation.
2. Can I buy a home with student loan debt?
   Yes, but your student loans will be factored into your debt-to-income ratio. Focus on managing payments and maintaining good credit.
3. Should I pay off all debt before buying a home?
   Not necessarily, but reducing debt improves your DTI ratio and might help you qualify for better rates.
4. What’s the difference between an appraisal and an inspection?
   An appraisal determines the home’s value for the lender, while an inspection evaluates the home’s condition for you.
5. How much should I offer below asking price?
   There’s no standard rule – it depends on market conditions, comparable sales, and the property’s condition. Work with your agent to determine a competitive offer.