CMPS - Certified Mortgage Planning Specialist Debt and Cash Flow Management Questions and Answers

Question 1

A client with a stable income and a low-interest first mortgage wants to consolidate $50,000 in high-interest credit card debt and fund a small home renovation.
They are concerned about rising interest rates and want predictable payments.
Which of the following strategies would a CMPS practitioner most likely recommend to best meet the client's goals?

Accepted Answer

A cash-out refinance to lock in a new fixed rate on the entire mortgage balance.

Answer

A Home Equity Line of Credit (HELOC) due to its flexibility and lower initial costs.

Answer

A personal loan, as it doesn't use the home as collateral.

Answer

The debt avalanche method, paying off the highest-interest debts first without taking on new loans.

Question 2

Which of the following is the primary purpose of conducting a cash flow analysis for a prospective homebuyer?

Accepted Answer

To determine their capacity to manage monthly housing expenses and other financial obligations.

Answer

To calculate their precise credit score.

Answer

To select the most profitable investment properties.

Answer

To complete the Uniform Residential Loan Application (URLA).

Question 3

A mortgage planner is calculating a client's back-end debt-to-income (DTI) ratio. The client has a gross monthly income of $8,000. Their proposed monthly mortgage payment (PITI) is $2,200. They also have a $450 monthly car payment, a $250 monthly student loan payment, and minimum credit card payments totaling $150. What is their back-end DTI ratio?

Accepted Answer

40.6%

Answer

38.1%

Answer

27.5%

Answer

35.6%

Question 4

A homeowner is experiencing a temporary financial hardship and is struggling to make their mortgage payments but wants to keep their home. Which of the following debt management strategies is specifically designed to negotiate new, more affordable loan terms with the lender, such as a lower interest rate or an extended term?

Accepted Answer

Loan Modification

Answer

Short Sale

Answer

Refinancing

Answer

Deed in Lieu of Foreclosure

Question 5

Which debt reduction strategy involves making fixed, additional principal payments each month with the primary goal of reducing the overall loan term and total interest paid?

Accepted Answer

Planned Prepayment

Answer

Debt Snowball

Answer

Loan Consolidation

Answer

Mortgage Recasting

Question 6

When advising a client on cash flow management, which factor is typically excluded from the calculation of their back-end debt-to-income (DTI) ratio by mortgage lenders?

Accepted Answer

Monthly car insurance and utility payments.

Answer

Minimum payments on revolving credit card debt.

Answer

Monthly alimony or child support payments.

Answer

The proposed principal, interest, taxes, and insurance (PITI) payment.