Practice Test Geeks(CMC) Certified Mortgage Consultant Practice Test
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Mortgage Products and Practices 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 Mortgage Products and Practices flashcards as text

  1. Under the Ability-to-Repay (ATR) rule, which of the following loan types is presumed to comply if it meets safe harbor criteria?

    Answer: Qualified Mortgages (QM)

    Qualified Mortgages receive either a conclusive or rebuttable presumption of ATR compliance depending on the loan's pricing relative to APOR.

  2. A borrower has a 5/1 ARM with a 2/2/5 cap structure. This means the rate can increase a maximum of:

    Answer: 2% at first adjustment, 2% at each subsequent adjustment, and 5% over the initial rate lifetime

    A 2/2/5 cap means: 2% cap at first adjustment, 2% cap at each subsequent adjustment, and 5% maximum lifetime increase over the start rate.

  3. Which mortgage practice involves charging a higher interest rate in exchange for the lender paying some or all closing costs?

    Answer: Yield spread premium (lender credit)

    A lender credit (formerly yield spread premium) means the borrower accepts a higher rate and the lender uses the extra revenue to cover closing costs.

  4. What is the maximum allowable seller concession on a conventional conforming loan with an LTV between 75.01% and 90%?

    Answer: 3%

    Fannie Mae limits seller concessions to 3% of the purchase price for conventional loans with LTV between 75.01% and 90%.

  5. A 2-1 buydown temporarily reduces the borrower's rate by:

    Answer: 2% in year 1 and 1% in year 2, then the note rate applies

    A 2-1 buydown reduces the interest rate by 2% in year 1 and 1% in year 2, with the full note rate in effect from year 3 forward.

  6. Which type of mortgage is specifically designed for properties requiring significant rehabilitation and bundles renovation costs into the loan?

    Answer: FHA 203(k) loan

    The FHA 203(k) rehabilitation loan allows borrowers to finance both the purchase and cost of repairs in a single mortgage.

  7. What is the key difference between a 'closed-end' second mortgage and a HELOC?

    Answer: A closed-end second provides a lump-sum disbursement; a HELOC is a revolving credit line

    A closed-end second mortgage disburses a fixed lump sum at closing, while a HELOC functions as a revolving line that can be drawn and repaid repeatedly.