CMC Client Relations and Advisory 2 — Questions and Answers
Question 1: A client with a 580 credit score wants to purchase a home with 3% down. Which loan program is most appropriate to recommend?
- Conventional loan with PMI
- FHA loan (Correct answer)
- VA loan
- USDA Rural Development loan
Correct answer: FHA loan
FHA loans accept credit scores as low as 580 with a 3.5% down payment, making them the best fit for this client's profile.
Question 2: During a needs assessment, a client mentions they plan to sell their home in 3–4 years. Which mortgage structure best serves this client?
- 30-year fixed rate
- 5/1 ARM (Correct answer)
- 15-year fixed rate
- Interest-only loan for 10 years
Correct answer: 5/1 ARM
A 5/1 ARM offers a lower initial rate for five years, aligning with the client's short holding period and saving interest costs.
Question 3: A self-employed borrower cannot document income through W-2s. What alternative documentation strategy should a CMC explore first?
- State income loan application
- Bank statement loan program (Correct answer)
- No-doc loan
- Co-signer addition
Correct answer: Bank statement loan program
Bank statement loan programs allow self-employed borrowers to qualify using 12–24 months of personal or business bank deposits as income evidence.
Question 4: A client asks why their Loan Estimate shows a higher APR than the stated interest rate. The CMC should explain that:
- The lender made a calculation error
- APR includes fees and costs spread over the loan term, making it higher (Correct answer)
- APR only reflects the lender's profit margin
- The interest rate will adjust to match the APR at closing
Correct answer: APR includes fees and costs spread over the loan term, making it higher
APR incorporates the interest rate plus financed fees and costs, giving borrowers a more complete view of the loan's true annual cost.
Question 5: Which technique helps a CMC uncover unstated client concerns during an advisory meeting?
- Presenting product brochures immediately
- Asking open-ended discovery questions (Correct answer)
- Quoting rates before assessing needs
- Limiting the meeting to 15 minutes
Correct answer: Asking open-ended discovery questions
Open-ended questions encourage clients to share priorities, fears, and goals that may not emerge from yes/no inquiries.
Question 6: A client's debt-to-income ratio is 47% on a conventional loan application. The CMC should FIRST suggest:
- Applying for a larger loan to get a better rate
- Paying down a revolving debt before closing to lower the DTI (Correct answer)
- Switching to a stated-income program
- Adding a non-occupant co-borrower immediately
Correct answer: Paying down a revolving debt before closing to lower the DTI
Reducing revolving balances directly lowers the monthly debt obligations used in DTI calculations, potentially bringing the ratio within conventional guidelines.
Question 7: When a client compares two loan offers with identical rates but different origination fees, the CMC should help them evaluate using:
- Only the monthly payment difference
- Break-even analysis on the fee savings vs. time in home (Correct answer)
- The lender with the larger company size
- The loan with the higher APR
Correct answer: Break-even analysis on the fee savings vs. time in home
Break-even analysis calculates how long it takes for monthly savings (from lower fees) to offset upfront costs, revealing the true cost advantage based on the client's timeline.
CMC Client Relations and Advisory 2
A client with a 580 credit score wants to purchase a home with 3% down.
Which loan program is most appropriate to recommend?