Module 4 & half of module 5

Question 1

patent defect

Answer 1

readily visible upon reasonable inspection

Question 2

defect that does not be disclosed by the seller

Answer 2

patent defect

Question 3

latent defect

Answer 3

not readily observable

Question 4

Water damage, bug infestation

Answer 4

latent defect

Question 5

Poses serious risk

Answer 5

material latent defect

Question 6

Qualifying a buyer

Answer 6

assessing their financial readiness

Question 7

Buyer would face HST obligations if the property

Answer 7

was used for a commercial purpose or is a fully reno’ed home OR purchasing the new home/fees associated with moving

Question 8

high family formation rate may predict a

Answer 8

seller’s market

Question 9

Stable employment rates

Answer 9

balanced market

Question 10

When interests rates are high

Answer 10

no one wnats to sell bc of the risk of ending up in greater debt

Question 11

When interests rates are low

Answer 11

mortgages are more affordable - people want to buy

Question 12

Non-resident sellers

Answer 12

must pay capital gains tax and provide proof w a clearance certificate

Question 13

Adjustments are costs that are

Answer 13

allocated bw a seller and buyer on closing

Question 14

Most common adjustments

Answer 14

outstanding utility costs and property tax

Question 15

Property inspectors look for information on

Answer 15

the physical structure and mechanical systems (AC, heating)

Question 16

Land transfer tax is assessed when

Answer 16

a deed is registered

Question 17

First time home buyers may qualify for

Answer 17

a rebate of some or all of the land transfer tax

Question 18

Comisson from a buyer is most commonly paid to

Answer 18

the listing brokerage by the sellers lawyer

Question 19

Provinical land transfer tax is based on

Answer 19

property value

Question 20

Equitable mortgage is used when

Answer 20

a borrower requires additional funding

Question 21

Equitable mortgages do not disturb

Answer 21

existing first mortgage

Question 22

Amortization refers to

Answer 22

the decrease in a loan due to scheduled payments

Question 23

Amortization periods range from

Answer 23

5 to 30 yrs

Question 24

Amortization periods for residential mortgages

Answer 24

15 to 25 yrs

Question 25

Partially Amortization mortgage

Answer 25

low monthly payments with a ballon payment at maturity date

Question 26

When interest rates are falling the term for a mortgage is

Answer 26

short

Question 27

When interest rates are stable or increasing the term for a mortgage is

Answer 27

long, such as 5 yrs to be assured of the lower or stable interest rate

Question 28

Loan to value

Answer 28

ratio of a loan to the value of a property

Question 29

Higher loan to value means

Answer 29

the more risk the lender has

Question 30

Fixed rate mortgage

Answer 30

interest does not change throughout the term of the loan

Question 31

Variable rate rate mortgage

Answer 31

Interest rate is adjusted to reflect market conditions

Question 32

Interest plus specified principal borrower repays

Answer 32

a fixed principal amount and periodically asked to pay interest

Question 33

blended/

amortized mortgages

Answer 33

equal payments (mix of principal and interest based) at specific intervals

Question 34

Most common type of payment plan for residential mortgages

Answer 34

Blended amortized

Question 35

Second implied covenant

Answer 35

Mortgagor promises that the land is held in fee simple (land is owned in good title)

Question 36

third implied covenant

Answer 36

Mortgagor promises that for a leasehold, the lease is valid and up to date

Question 37

third implied covenant reimbursment

Answer 37

will occur for every non-payment/

performance of other convenants under the lease

Question 38

Right to quiet possession

Answer 38

Mortgagor has the right to occupy the property uninterrupted unless in default

Question 39

Pre payment

Answer 39

mortgagor has agreed to make payments according to a specified schedule (do not have to pay more than already specified)

Question 40

Postponement

Answer 40

An existing mortgagee may agree to postpone the priority of their mortgage in favour of a prior motgage being replaced/created

Question 41

Mortgage default

Answer 41

failure to fulfill a promise/obligation

Question 42

Judicial sale

Answer 42

Disposition of a mortgaged property by court action

Question 43

Credit unions are adminstered by the

Answer 43

financial services comission of ontario

Question 44

Equity takeout

Answer 44

Renewing mortgage and increasing outstanding principal bc property value has increased

Question 45

purchase plus improvements

Answer 45

buyer applies to cover closing costs and improvements that will be made following closing

Question 46

Prime market

Answer 46

focused on borrowers who have high credit scores

Question 47

sub prime markets

Answer 47

lender who entertain higher risk levels involving borrowers

Question 48

Secondary market

Answer 48

trading of existing mortgages

Question 49

Interest rates as based on

Answer 49

supply and demand

Question 50

when demand for mortgages increases and supply is constant

Answer 50

interest rates rise

Question 51

abundant supply for homes means (interest rates)

Answer 51

lower rates

Question 52

Longer the amortization mean

Answer 52

lower the payment and more interest paid

Question 53

Biweekly mortgage payment calculations

Answer 53

payment factor x loan value (in # of thousands)