Practice Test Geeks(CMPS) Certified Mortgage Planning Specialist Practice Test
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Homeowner Cash Flow Scenarios 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 Homeowner Cash Flow Scenarios flashcards as text

  1. A homeowner refinances from a 6.5% 30-year mortgage to a 5.0% 30-year mortgage on a $300,000 balance. The monthly payment drops by $290. Closing costs total $5,800. What is the break-even period?

    Answer: 20 months

    Break-even = $5,800 / $290 = 20 months.

  2. A homeowner with a $2,500 monthly gross income has a $900 mortgage payment, $200 car payment, and $150 student loan. What is their back-end DTI ratio?

    Answer: 52%

    Total monthly debt ($900+$200+$150=$1,250) divided by $2,500 gross income = 50%; back-end DTI is 50%.

  3. Which cash flow strategy best helps a homeowner reduce their effective mortgage interest cost without refinancing?

    Answer: Switching to biweekly payments

    Biweekly payments result in one extra full payment per year, reducing principal faster and total interest paid.

  4. A homeowner has $50,000 in home equity and is considering a HELOC at 7.5% vs. paying off a credit card at 22%. From a cash flow perspective, which action maximizes benefit?

    Answer: Pay off the credit card using the HELOC

    Using a 7.5% HELOC to eliminate 22% credit card debt produces a 14.5% net interest rate reduction, directly improving cash flow.

  5. A homeowner's net operating income from a rental property decreases by $400/month due to a vacancy. How does this affect their mortgage planning cash flow analysis?

    Answer: It reduces qualifying rental income used in DTI calculations

    Reduced rental income lowers the qualifying income used by lenders in DTI calculations, potentially limiting refinance or new loan eligibility.

  6. A homeowner converts their 30-year mortgage to a 15-year mortgage. Their payment increases by $600/month but they save $120,000 in interest over the life of the loan. What concept best describes this trade-off?

    Answer: Opportunity cost vs. guaranteed return

    The $600/month extra payment represents an opportunity cost versus investing, while the $120,000 savings is a guaranteed return — this is the classic opportunity cost trade-off.

  7. A homeowner's ARM rate adjusts from 4% to 7% on a $250,000 balance. Approximately how much does their monthly payment increase?

    Answer: $625

    A 3% rate increase on $250,000 results in roughly $625/month higher payment, based on standard amortization calculations.