Practice Test Geeks(CMC) Certified Mortgage Consultant Practice Test
← All CMC Flashcard Decks

Real Estate Finance 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 Real Estate Finance flashcards as text

  1. What is a 'jumbo loan' in real estate finance?

    Answer: A mortgage that exceeds conforming loan limits set by the FHFA

    A jumbo loan is a mortgage that exceeds the conforming loan limits established by the Federal Housing Finance Agency (FHFA).

  2. Which of the following best describes a 'short sale' in real estate?

    Answer: A sale where the lender agrees to accept less than the outstanding mortgage balance

    A short sale occurs when the lender agrees to accept proceeds from a property sale that are less than the total amount owed on the mortgage.

  3. What is the difference between 'discount points' and an 'origination fee'?

    Answer: Discount points reduce the interest rate; origination fees compensate the lender for processing the loan

    Discount points are prepaid interest that permanently lower the mortgage rate, while origination fees compensate the lender for underwriting and processing.

  4. A homeowner wants to access equity without refinancing their first mortgage. Which product is most appropriate?

    Answer: Home Equity Line of Credit (HELOC)

    A HELOC allows homeowners to borrow against their equity as a revolving credit line without disturbing their existing first mortgage.

  5. Under the Dodd-Frank Act, what is a 'Qualified Mortgage' (QM)?

    Answer: A mortgage meeting specific underwriting standards that provides lenders safe harbor from ability-to-repay claims

    A Qualified Mortgage meets specific ATR underwriting criteria and gives lenders legal protection from borrower claims of inadequate ability-to-repay assessment.

  6. What is 'negative amortization' in mortgage lending?

    Answer: When a loan balance increases because payments are less than the interest accruing

    Negative amortization occurs when monthly payments are insufficient to cover accruing interest, causing the unpaid interest to be added to the loan balance.

  7. Which index is most commonly used to set rates on adjustable-rate mortgages in the US after LIBOR was phased out?

    Answer: SOFR (Secured Overnight Financing Rate)

    SOFR replaced LIBOR as the primary benchmark index for ARMs in the US following LIBOR's phase-out.