Practice Test Geeks(CMPS) Certified Mortgage Planning Specialist Practice Test
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Client Assessment & Loan Structuring Flashcards

7 cards from real CMPS 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 Assessment & Loan Structuring flashcards as text

  1. A client is deciding between a 20% down payment (avoiding PMI) and a 10% down payment (keeping cash for investments). What framework should a CMPS use to guide this decision?

    Answer: Compare the after-tax cost of PMI against the expected return on retained invested capital

    A CMPS analyzes the opportunity cost of capital, comparing PMI expense to potential investment returns to guide an optimal financial decision.

  2. What does a borrower's 'residual income' represent, and why is it relevant in mortgage planning?

    Answer: Monthly income left after all debt obligations, used by VA loans as a secondary qualification measure

    Residual income is income remaining after all major monthly obligations, and VA loans use it as an additional qualifier to ensure the borrower can meet living expenses.

  3. A client is purchasing a second home and plans to rent it out occasionally. Which loan program is appropriate if the property will be owner-occupied for part of the year?

    Answer: Second home conventional mortgage

    A property used part-time by the owner qualifies as a second home under conventional guidelines, provided the borrower has primary control and it is not managed as a rental.

  4. Which scenario requires the mortgage planner to complete a written Benefit to Borrower analysis?

    Answer: A refinance transaction to ensure the new loan provides a tangible net benefit over the existing loan

    Most refinance guidelines, especially for VA and FHA streamlines, require documenting a net tangible benefit to justify replacing the existing loan.

  5. A client wants to pay off their mortgage in 20 years but cannot afford a 20-year loan payment. What strategy should the planner suggest?

    Answer: Take a 30-year loan and make additional principal payments equivalent to a 20-year schedule

    A 30-year loan with voluntary extra principal payments provides payment flexibility while allowing the client to achieve their 20-year payoff goal.

  6. What is the effect of discount points on a mortgage, and when should a planner recommend them?

    Answer: Points are prepaid interest that lower the rate, recommended when the break-even period falls within the client's planned ownership horizon

    Discount points make financial sense only when the monthly savings from a lower rate recoup the upfront cost before the client moves or refinances.

  7. A borrower has a 580 credit score. Which loan program offers the lowest minimum down payment requirement at that score?

    Answer: FHA loan

    FHA loans allow a 3.5% down payment for borrowers with credit scores of 580 or above, making it the most accessible program at that score level.