Client Relations and Advisory Flashcards

A client with a 580 credit score wants to purchase a home with 3% down. Which loan program is most appropriate to recommend?

Answer: FHA loan

FHA loans accept credit scores as low as 580 with a 3.5% down payment, making them the best fit for this client's profile.

During a needs assessment, a client mentions they plan to sell their home in 3–4 years. Which mortgage structure best serves this client?

Answer: 5/1 ARM

A 5/1 ARM offers a lower initial rate for five years, aligning with the client's short holding period and saving interest costs.

A self-employed borrower cannot document income through W-2s. What alternative documentation strategy should a CMC explore first?

Answer: Bank statement loan program

Bank statement loan programs allow self-employed borrowers to qualify using 12–24 months of personal or business bank deposits as income evidence.

A client asks why their Loan Estimate shows a higher APR than the stated interest rate. The CMC should explain that:

Answer: APR includes fees and costs spread over the loan term, making it higher

APR incorporates the interest rate plus financed fees and costs, giving borrowers a more complete view of the loan's true annual cost.

Which technique helps a CMC uncover unstated client concerns during an advisory meeting?

Answer: Asking open-ended discovery questions

Open-ended questions encourage clients to share priorities, fears, and goals that may not emerge from yes/no inquiries.

A client's debt-to-income ratio is 47% on a conventional loan application. The CMC should FIRST suggest:

Answer: Paying down a revolving debt before closing to lower the DTI

Reducing revolving balances directly lowers the monthly debt obligations used in DTI calculations, potentially bringing the ratio within conventional guidelines.

When a client compares two loan offers with identical rates but different origination fees, the CMC should help them evaluate using:

Answer: Break-even analysis on the fee savings vs. time in home

Break-even analysis calculates how long it takes for monthly savings (from lower fees) to offset upfront costs, revealing the true cost advantage based on the client's timeline.