Practice Test Geeks(CMC) Certified Mortgage Consultant Practice Test
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Client Financial Advising Flashcards

7 cards from real CMC 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 Financial Advising flashcards as text

  1. A client is purchasing a home and the seller agrees to pay 3% of the purchase price toward closing costs. What is this arrangement called?

    Answer: Seller concessions

    Seller concessions are funds the seller contributes toward the buyer's closing costs; conventional loans limit these based on LTV (typically 3–9%).

  2. Which of the following represents a 'front-end' DTI ratio calculation?

    Answer: Monthly housing payment (PITI) divided by gross monthly income

    The front-end (housing) DTI ratio compares only the proposed monthly housing payment (principal, interest, taxes, and insurance) to gross monthly income.

  3. A client is self-employed and their net income on Schedule C is significantly lower than their gross receipts. What should a CMC advise about qualifying income?

    Answer: Lenders use net profit from Schedule C, adjusted for non-cash deductions such as depreciation

    For Schedule C filers, lenders use net profit adjusted by adding back non-cash deductions like depreciation and depletion to calculate qualifying income.

  4. What is the primary purpose of an escrow account in a mortgage arrangement?

    Answer: To collect and pay property taxes and insurance on behalf of the borrower

    An escrow (impound) account collects monthly portions of property taxes and insurance premiums so the lender can pay them on the borrower's behalf when due.

  5. A client asks about the impact of multiple mortgage inquiries during rate shopping. What should a CMC explain?

    Answer: Multiple mortgage inquiries within a 14–45 day window are treated as a single inquiry by most scoring models

    FICO and VantageScore models group multiple mortgage-related inquiries made within a rate-shopping window (typically 14–45 days) and count them as one inquiry.

  6. A client with a 580 credit score is applying for an FHA loan. What is the minimum down payment required?

    Answer: 3.5%

    FHA guidelines require a minimum 3.5% down payment for borrowers with a credit score of 580 or higher; scores between 500–579 require 10% down.

  7. A client asks whether paying mortgage discount points is financially advantageous. What break-even analysis should a CMC perform?

    Answer: Divide the points cost by the monthly rate reduction to find how many months to recoup the cost

    The break-even period is calculated by dividing the upfront cost of points by the monthly payment savings; if the client plans to stay longer than the break-even period, points are advantageous.