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
A client is weighing an interest-only mortgage against a fully amortizing loan. Which client profile is most suited for an interest-only product?
Answer: A high-income borrower with irregular cash flow who invests the payment difference
Interest-only loans are best suited to sophisticated borrowers with variable income who plan to deploy the payment savings into higher-returning investments or large irregular income events.
When assessing a client's risk tolerance for mortgage structuring, which question is most diagnostic?
Answer: How would a 2% rate increase in 3 years affect your financial plan?
Understanding the client's ability and willingness to absorb payment increases reveals their true risk tolerance and guides fixed vs. adjustable product selection.
A borrower is purchasing a home using gift funds for the down payment. What documentation must the lender obtain?
Answer: A signed gift letter and evidence of fund transfer into the borrower's account
Lenders require a gift letter confirming no repayment is expected and documentation showing the funds were transferred to the borrower prior to closing.
In the context of mortgage planning, what does 'loan stacking' risk refer to?
Answer: Taking out multiple small personal loans to fund a down payment, misrepresenting the source of funds
Loan stacking involves obtaining undisclosed debts to fund a down payment, which constitutes mortgage fraud by misrepresenting the borrower's true liabilities.
Which of the following best describes the role of a mortgage planner versus a traditional loan officer?
Answer: A mortgage planner integrates the mortgage into the client's broader financial plan and long-term goals
The CMPS designation emphasizes a holistic, planning-first approach that coordinates the mortgage decision with tax strategy, investments, and retirement planning.
A client has excellent credit but high existing debt. Which strategy would most efficiently improve their qualifying DTI without paying off debt?
Answer: Extend the loan term from 15 to 30 years to lower the mortgage payment
Switching from a 15-year to a 30-year loan lowers the required monthly payment, directly reducing the front-end and back-end DTI ratios.
What is the significance of the 'total cost analysis' (TCA) in CMPS mortgage planning?
Answer: It compares the full lifetime cost of competing mortgage scenarios to identify the optimal financial choice
A total cost analysis projects the complete financial picture — payments, interest, equity build, and tax impact — over the client's ownership horizon to reveal the true best option.