Client Advisory & Consultation Flashcards
7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Client Advisory & Consultation flashcards as text
A borrower asks why their pre-qualification amount differs from their final approved loan amount. What is the most accurate explanation an underwriter should provide?
Answer: Pre-qualification is based on stated information without verification, while the approved amount reflects verified income, assets, and credit
Pre-qualification relies on unverified borrower-stated data, whereas final loan approval is based on fully documented and verified financial information.
When advising a client about a rate lock, which risk should the underwriter specifically disclose?
Answer: If the loan does not close before the lock expiration, the borrower may face a higher rate or extension fee
Borrowers must understand that if closing is delayed past the lock period, they risk a rate increase or must pay an extension fee.
A client with a 580 credit score asks about conventional loan options. What is the most appropriate advisory response?
Answer: A 580 score typically does not meet conventional loan minimums; FHA may be a more suitable option
Conventional loans typically require a minimum 620 credit score, so a borrower with 580 should be counseled toward FHA or credit improvement strategies.
During consultation, a borrower reveals they plan to rent out the subject property immediately after purchase but want to claim owner-occupancy for a better rate. How should the underwriter respond?
Answer: Advise the borrower that misrepresenting occupancy intent constitutes mortgage fraud
Misrepresenting intended occupancy is mortgage fraud, and the underwriter must advise the borrower of this and refuse to proceed under false pretenses.
Which federal regulation requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?
Answer: TILA-RESPA Integrated Disclosure (TRID) rule
The TRID rule, effective since 2015, requires lenders to issue a Loan Estimate within three business days of application receipt.
A client is confused about the difference between mortgage insurance premium (MIP) and private mortgage insurance (PMI). What is the key distinction an underwriter should explain?
Answer: MIP is required on FHA loans for the life of the loan in many cases; PMI on conventional loans can be removed once equity reaches 20%
MIP is required on FHA loans and may last the loan's life, while PMI on conventional loans can be cancelled when the LTV reaches 80%.
When a borrower asks whether they should pay discount points to lower their interest rate, which factor is most important for the underwriter to help the client evaluate?
Answer: The borrower's break-even period compared to their expected time in the home
The break-even analysis—dividing point cost by monthly savings—tells the borrower how long it takes to recoup the upfront cost, which should be weighed against how long they plan to stay.