Practice Test Geeks(CMPS) Certified Mortgage Planning Specialist Practice Test
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Debt and Cash Flow Management 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 Debt and Cash Flow Management flashcards as text

  1. A borrower has a gross monthly income of $8,000 and total monthly debt obligations of $3,200. What is their debt-to-income (DTI) ratio?

    Answer: 40%

    $3,200 / $8,000 = 0.40, or 40% DTI.

  2. Which cash flow analysis technique compares a borrower's monthly income against all recurring obligations to determine mortgage affordability?

    Answer: Residual income analysis

    Residual income analysis measures income remaining after all monthly obligations, a key VA loan underwriting tool.

  3. A client wants to pay off a $20,000 auto loan with 48 months remaining before applying for a mortgage. The monthly payment is $450. How would eliminating this debt affect their qualifying income requirement?

    Answer: It reduces gross income needed to qualify by approximately $1,500/month

    Removing a $450/month debt obligation reduces the gross income needed to support it by roughly $1,500/month at a 30% back-end DTI ratio.

  4. Under conventional lending guidelines, what is the maximum allowable back-end DTI ratio for standard loan approval?

    Answer: 50%

    Fannie Mae allows up to 50% DTI with compensating factors for conventional loans.

  5. Which of the following items is included in the back-end DTI ratio calculation but NOT the front-end DTI ratio?

    Answer: Monthly car payment

    Back-end DTI includes all monthly debt obligations; front-end DTI includes only housing-related expenses.

  6. A mortgage planning specialist recommends a debt consolidation refinance to a client. Which primary risk must be disclosed?

    Answer: Unsecured debt becomes secured by the home

    Consolidating unsecured debt into a mortgage converts it to secured debt, putting the home at risk if the borrower defaults.

  7. A borrower's net monthly income is $6,000 after taxes. Their total monthly expenses including the proposed mortgage are $4,200. What is their monthly cash surplus?

    Answer: $1,800

    $6,000 - $4,200 = $1,800 monthly cash surplus.