CMPS Homeowner Cash Flow Scenarios 2

Question 1

A homeowner refinances from a 6.5% 30-year mortgage to a 5.0% 30-year mortgage on a $300,000 balance. The monthly payment drops by $290. Closing costs total $5,800. What is the break-even period?

Accepted Answer

20 months

Answer

10 months

Answer

30 months

Answer

40 months

Question 2

A homeowner with a $2,500 monthly gross income has a $900 mortgage payment, $200 car payment, and $150 student loan. What is their back-end DTI ratio?

Accepted Answer

52%

Answer

36%

Answer

40%

Answer

50%

Question 3

Which cash flow strategy best helps a homeowner reduce their effective mortgage interest cost without refinancing?

Accepted Answer

Switching to biweekly payments

Answer

Extending the loan term

Answer

Taking a cash-out refinance

Answer

Converting to an interest-only loan

Question 4

A homeowner has $50,000 in home equity and is considering a HELOC at 7.5% vs. paying off a credit card at 22%. From a cash flow perspective, which action maximizes benefit?

Accepted Answer

Pay off the credit card using the HELOC

Answer

Keep the credit card and invest the $50,000

Answer

Refinance the primary mortgage instead

Answer

Do nothing and continue minimum payments

Question 5

A homeowner's net operating income from a rental property decreases by $400/month due to a vacancy. How does this affect their mortgage planning cash flow analysis?

Accepted Answer

It reduces qualifying rental income used in DTI calculations

Answer

It increases their available cash flow for debt service

Answer

It has no effect on their primary residence cash flow

Answer

It triggers automatic loan modification

Question 6

A homeowner converts their 30-year mortgage to a 15-year mortgage. Their payment increases by $600/month but they save $120,000 in interest over the life of the loan. What concept best describes this trade-off?

Accepted Answer

Opportunity cost vs. guaranteed return

Answer

Negative amortization

Answer

Loan-to-value rebalancing

Answer

Equity stripping

Question 7

A homeowner's ARM rate adjusts from 4% to 7% on a $250,000 balance. Approximately how much does their monthly payment increase?

Accepted Answer

$625

Answer

$350

Answer

$480

Answer

$780