CRU Financial Analysis & Planning 3

Question 1

A borrower has $120,000 in total assets and $85,000 in total liabilities. What is the borrower's net worth?

Accepted Answer

$35,000

Answer

Net worth = Total assets − Total liabilities = $120,000 − $85,000 = $35,000.

Question 2

Which loan scenario would most likely require the borrower to have reserves equal to six months of PITI?

Accepted Answer

Investment property purchase with a high LTV

Answer

Investment properties and higher-risk transactions typically require greater reserves — often six months of PITI — compared to primary residences.

Question 3

When evaluating a borrower's income from rental properties, what percentage of gross rental income may typically be used after applying a vacancy factor under standard guidelines?

Accepted Answer

75%

Answer

Standard agency guidelines allow 75% of gross rental income to account for vacancy and maintenance expenses.

Question 4

What is the purpose of analyzing a borrower's payment shock in residential underwriting?

Accepted Answer

To assess whether the borrower can afford the increase from current housing expense to the proposed payment

Answer

Payment shock measures how much the proposed housing cost exceeds the borrower's current expense, indicating potential repayment stress.

Question 5

A borrower applies for a $300,000 loan on a property appraised at $375,000. What is the loan-to-value (LTV) ratio?

Accepted Answer

80%

Answer

LTV = Loan Amount / Appraised Value = $300,000 / $375,000 = 80%.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Financial Analysis & Planning 3