CMPS Homeowner Cash Flow Scenarios 3

Question 1

A homeowner receives a $15,000 tax refund and asks their mortgage planner about using it. Which application produces the best guaranteed cash flow improvement?

Accepted Answer

Applying as a lump-sum principal curtailment

Answer

A lump-sum principal curtailment permanently reduces the loan balance, lowering future interest charges and improving long-term cash flow at the mortgage's interest rate.

Question 2

A homeowner's property taxes increase by $200/month mid-year. If they have an escrow account, what is the most likely immediate cash flow impact?

Accepted Answer

Their total monthly payment increases at the next escrow analysis

Answer

Escrow accounts are analyzed annually, so the higher tax obligation triggers a payment adjustment at the next scheduled escrow analysis.

Question 3

What does positive cash flow from a primary residence most commonly refer to in mortgage planning?

Accepted Answer

Monthly income minus all housing expenses yielding a surplus

Answer

Positive cash flow in primary residence planning means monthly take-home income exceeds all housing-related expenses, leaving a monthly surplus.

Question 4

A married couple has a combined gross income of $10,000/month. Their front-end DTI limit is 28%. What is the maximum allowable monthly housing payment?

Accepted Answer

$2,800

Answer

$10,000 × 28% = $2,800 maximum monthly housing payment under standard front-end DTI guidelines.

Question 5

A homeowner in the 22% federal tax bracket pays $18,000 in mortgage interest annually. Assuming they itemize, what is the after-tax cost of that interest?

Accepted Answer

$14,040

Answer

$18,000 × (1 - 0.22) = $14,040 after-tax cost of mortgage interest when itemizing deductions.

(CMPS) Certified Mortgage Planning Specialist Practice Test

(CMPS) Certified Mortgage Planning Specialist Practice Test

CMPS Homeowner Cash Flow Scenarios 3