--- primaryColor: 'rgb(121, 82, 179)' secondaryColor: '#DDDDDD' textColor: black shuffle_questions: true --- ### What is gross income? - [ ] The amount of money received after taxes and expenses - [ ] The total amount of debt a household can take on - [x] The total, verifiable income of a household before expenses, debts and taxes are deducted - [ ] The total net income after all deductions > **Explanation:** Gross income refers to the total, verifiable income of a household before any expenses, debts, and taxes have been deducted. This figure is crucial in determining mortgage loan eligibility and affordability. ### Where can one typically find their yearly gross income figure? - [x] Federal W2 tax forms - [ ] Bank statements - [ ] Mortgage statements - [ ] Utility bills > **Explanation:** Yearly gross income figures can typically be found on federal W2 tax forms, which detail a person's earnings before deductions over the year. ### Which document can be used to determine monthly gross income? - [x] A recent pay statement - [ ] A utility bill - [ ] A bank statement - [ ] A credit report > **Explanation:** Monthly gross income can be obtained from a recent pay statement, which details an individual's earnings before deductions on a monthly basis. ### Why do mortgage providers use gross income to qualify home buyers? - [ ] To ensure buyers have a low credit score - [ ] To calculate home appreciation value - [x] To ensure buyers can afford their monthly mortgage payments - [ ] To determine the market value of homes > **Explanation:** Mortgage providers use the gross income figure to ensure that home buyers are not taking on too much debt and will be able to afford their monthly mortgage payments. ### What percentage of a household's gross monthly income can a monthly mortgage payment not exceed in most states? - [ ] 25% - [x] 50% - [ ] 75% - [ ] 60% > **Explanation:** In most states, a monthly mortgage payment cannot exceed fifty percent of a household's gross monthly income. This helps to prevent home buyers from taking on excessive debt that they may not be able to afford. ### Does gross income include taxes and other deductions? - [x] No - [ ] Yes - [ ] Only if specified - [ ] It depends on the lender > **Explanation:** Gross income does not include taxes and other deductions. It refers to the total, verifiable income of a household before any deductions are made. ### How does gross income help in determining mortgage loans? - [ ] By calculating the appreciation of the home - [x] By determining how much of a mortgage loan home buyers will be able to qualify for - [ ] By estimating future income - [ ] By inspecting household debts > **Explanation:** Gross income helps in determining how much of a mortgage loan home buyers will be able to qualify for, ensuring that they are not taking on too much debt. ### Can exact qualification terms vary depending on the loan type and location? - [x] Yes - [ ] No - [ ] Only in certain states - [ ] Only for specific lenders > **Explanation:** Exact qualification terms can vary depending on a number of factors including loan type, location, and other household debts. Each lender may have different criteria. ### What figure do mortgage providers use to ensure affordability of monthly mortgage payments? - [ ] Net income - [ ] Actual cash flow - [x] Gross income - [ ] Property taxes > **Explanation:** Mortgage providers use the gross income figure to ensure that homeowners can afford their monthly mortgage payments without allocating an excessive portion of their income to the mortgage. ### Why is it important that gross income is verifiable? - [x] To ensure accurate assessment for mortgage qualification - [ ] To ensure consistency in mortgage rates - [ ] To determine credit scores - [ ] To confirm legality of income sources > **Explanation:** It is important that gross income is verifiable to ensure an accurate assessment for mortgage qualification. This helps lenders to make informed decisions regarding the amount of mortgage a buyer can afford.