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

Break-even = $5,800 / $290 = 20 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

Total monthly debt ($900+$200+$150=$1,250) divided by $2,500 gross income = 50%; back-end DTI is 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

Biweekly payments result in one extra full payment per year, reducing principal faster and total interest paid.

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

Using a 7.5% HELOC to eliminate 22% credit card debt produces a 14.5% net interest rate reduction, directly improving cash flow.

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

Reduced rental income lowers the qualifying income used by lenders in DTI calculations, potentially limiting refinance or new loan eligibility.

(CMPS) Certified Mortgage Planning Specialist Practice Test

(CMPS) Certified Mortgage Planning Specialist Practice Test

CMPS Homeowner Cash Flow Scenarios 2