CMP Loan Processing Fundamentals 5

Question 1

A borrower has $2,100 in total monthly debts including the new housing payment and $6,000 in gross monthly income. What is the back-end DTI?

Accepted Answer

35%

Answer

Back-end DTI equals $2,100 divided by $6,000, or 35%.

Question 2

A borrower's proposed PITI is $1,500 and gross monthly income is $5,000. What is the housing (front-end) ratio?

Accepted Answer

30%

Answer

The front-end ratio is $1,500 divided by $5,000, which equals 30%.

Question 3

A borrower earns $25 per hour working a consistent 40 hours per week. What is the monthly qualifying income?

Accepted Answer

$4,333.33

Answer

$25 x 40 hours x 52 weeks / 12 months equals $4,333.33.

Question 4

Under standard agency guidelines, how much self-employment history is generally needed to use self-employed income?

Accepted Answer

2 years

Answer

A two-year self-employment history is generally required, though 12-24 months may be allowed with strong mitigating factors.

Question 5

Purchase price is $310,000, the appraised value is $300,000, and the loan amount is $270,000. What is the LTV?

Accepted Answer

90.0%

Answer

LTV uses the lesser of price or appraised value, so $270,000 / $300,000 equals 90%.

CMP - Certified Mortgage Processor Practice Test