CMC Advanced Mortgage Products 4

Question 1

Which mortgage structure allows a borrower to pay a set amount monthly that is less than the scheduled P&I payment, with the shortfall added to the principal balance?

Accepted Answer

Negative amortization mortgage

Answer

A negative amortization mortgage allows payments below the interest owed, with the difference (deferred interest) added to the outstanding principal balance.

Question 2

A borrower in a rural area wants 100% financing on a primary residence. Which loan product is most appropriate?

Accepted Answer

USDA Rural Development Guaranteed Loan

Answer

The USDA Rural Development Guaranteed Loan program offers 100% financing for eligible rural properties to borrowers who meet income limits.

Question 3

What is the function of a 'recourse' clause in a home equity loan?

Accepted Answer

It allows the lender to pursue the borrower's other assets if the collateral is insufficient to cover the debt

Answer

A recourse clause gives the lender the right to pursue the borrower's other assets beyond the collateral if the property sale does not fully satisfy the debt.

Question 4

A bridge loan is most commonly used to:

Accepted Answer

Provide short-term financing so a buyer can purchase a new home before selling the current one

Answer

Bridge loans provide short-term interim financing that allows homebuyers to close on a new property while awaiting the sale of their existing home.

Question 5

In a graduated payment mortgage (GPM), how do monthly payments typically behave over time?

Accepted Answer

Payments start lower and increase at scheduled intervals before leveling off

Answer

A GPM features lower initial payments that gradually increase at predetermined intervals, then level off at a fixed amount for the remaining term.

(CMC) Certified Mortgage Consultant Practice Test

(CMC) Certified Mortgage Consultant Practice Test

CMC Advanced Mortgage Products 4