Practice Test Geeks(CRU) Certified Residential Underwriter Practice Test
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Financial Analysis & Planning Flashcards

7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Analysis & Planning flashcards as text

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

    Answer: $35,000

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

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

    Answer: Investment property purchase with a high LTV

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

  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?

    Answer: 75%

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

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

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

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

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

    Answer: 80%

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

  6. In underwriting, which of the following is considered an acceptable source of closing cost funds?

    Answer: Verified gift from a family member with a signed gift letter

    Gift funds from acceptable donors accompanied by a signed gift letter are an approved source of closing funds under most agency guidelines.

  7. How is 'adjusted gross income' most commonly used in residential mortgage underwriting?

    Answer: As the starting point for calculating self-employed borrower qualifying income

    Underwriters use adjusted gross income from tax returns as the baseline from which add-backs and deductions are applied to determine self-employed qualifying income.