Practice Test Geeks(CMC) Certified Mortgage Consultant Practice Test
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Client Financial Advising Flashcards

7 cards from real CMC 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 Financial Advising flashcards as text

  1. A client has a student loan in income-driven repayment (IDR) with a $0 monthly payment. How do most conventional lenders treat this for DTI purposes?

    Answer: Lenders use 0.5% to 1% of the outstanding balance as the qualifying payment

    Fannie Mae requires lenders to use 1% of the outstanding student loan balance (or the documented fully-amortized payment) when the current payment is $0.

  2. Which financial ratio is MOST critical for a CMC to evaluate when advising a client on mortgage affordability?

    Answer: Debt-to-income (DTI) ratio

    The debt-to-income ratio measures the percentage of gross monthly income consumed by debt payments and is the primary underwriting metric for mortgage affordability.

  3. A client asks about private mortgage insurance (PMI). When can PMI be cancelled on a conventional loan?

    Answer: When the LTV reaches 80% based on original purchase price or appraisal

    Under the Homeowners Protection Act, borrowers can request PMI cancellation when their LTV reaches 80% of the original value, and it must be automatically terminated at 78%.

  4. A client is considering an adjustable-rate mortgage (ARM). What is the significance of the initial cap, periodic cap, and lifetime cap?

    Answer: They define how much the interest rate can change at the first adjustment, each subsequent adjustment, and over the life of the loan

    ARM caps protect borrowers by limiting rate changes at the first adjustment (initial cap), each subsequent adjustment (periodic cap), and cumulatively over the loan term (lifetime cap).

  5. A client has a high LTV and limited cash reserves. Which loan type is MOST appropriate to recommend?

    Answer: FHA loan with built-in MIP

    FHA loans allow LTVs up to 96.5% and have more flexible reserve requirements, making them well-suited for clients with high LTV and limited savings.

  6. When a client receives a lump-sum bonus as part of their income, how should a CMC determine whether it qualifies for mortgage purposes?

    Answer: Average the bonus income over two years only if it is likely to continue

    Lenders require a two-year history of bonus income and documentation that it is likely to continue before averaging it into qualifying income.

  7. A client wants to purchase a second home as a vacation property. How does this differ from an investment property in mortgage advising?

    Answer: Second homes typically have lower interest rates and smaller down payment requirements than investment properties

    Second homes are owner-occupied vacation properties that receive more favorable rates and down payment requirements (often 10%) compared to investment properties (typically 15–25%).