Client Communication & Financial Advice Flashcards
7 cards from real CMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Client Communication & Financial Advice flashcards as text
A client is deciding between a 15-year and a 30-year mortgage. What financial trade-off should the advisor communicate?
Answer: A 15-year mortgage has higher monthly payments but significantly less total interest paid over the life of the loan
The 15-year term builds equity faster and reduces total interest paid, but requires higher monthly payments that reduce cash flow.
During a purchase transaction, a client is shocked by the final closing costs. What communication failure most likely caused this?
Answer: The advisor did not provide or clearly explain the Loan Estimate at application, which discloses anticipated closing costs
The Loan Estimate must be provided within three business days of application and clearly discloses estimated closing costs to prevent surprises.
A client asks whether they should lock their interest rate today or float it. What is the most responsible advice an advisor can provide?
Answer: Explain the risks of both options, share current market context, and let the client make an informed decision aligned with their risk tolerance
Advisors should present objective information about rate lock vs. float risks without making guarantees about market movement, allowing the client to decide.
A client mentions they plan to sell the home in 3 years. How should this affect the advisor's product recommendation?
Answer: A shorter-term ARM with an initial fixed period of 5 or 7 years may offer a lower rate and align with the client's planned ownership horizon
When a borrower plans to sell before the ARM's adjustment period begins, a hybrid ARM can provide a lower initial rate without rate-adjustment risk.
What is the advisor's ethical obligation when a client asks about a loan product that the advisor knows would not benefit the client's financial situation?
Answer: Disclose the potential drawbacks of the product and recommend a more suitable alternative in the client's best interest
Mortgage advisors have a duty to act in the client's best interest, which includes disclosing risks and recommending suitable products.
A client with a non-traditional credit history (no credit score) asks about mortgage options. What should the advisor communicate?
Answer: Manual underwriting programs, including FHA loans, can evaluate non-traditional credit references such as rent and utility payment history
FHA and some conventional programs allow manual underwriting using non-traditional credit references for borrowers with no credit score.
A client is upset after receiving a mortgage denial and calls the advisor for clarification. What is the advisor's first priority?
Answer: Calmly explain the reasons cited in the adverse action notice and discuss steps the client can take to strengthen their application
Reviewing the adverse action notice with the client and outlining corrective steps turns a negative experience into a constructive path forward.