Module 5 Part 2: Mortgages

Question 1

Conventional mortgage is when a borrower has a down payment of at least

Answer 1

20% (based on the appraised lending value or sale price, whichever is less)

Question 2

high ratio mortgage is when a borrower has a down payment of

Answer 2

less than 20%

Question 3

high ratio mortgage requires

Answer 3

mortgage default insurance

Question 4

Institutional leasers are not permitted to lend mortgage money when they amount is in

Answer 4

excess of 80%

Question 5

High loan to value ratio means

Answer 5

a higher risk (borrower has less equity)

Question 6

With mortgage default insurance, lenders can provide mortgages w/

Answer 6

as little as 5% downpayment

Question 7

Canada mortgage and housing corp.

Answer 7

housing agency for the gov of canada

Question 8

Genworth financial canada

Answer 8

private mortgage insurer

Question 9

Canada guaranty

Answer 9

private mortgage insurer for new home construction & secondary homes

Question 10

Mort. insurance premium is charged on

Answer 10

the amount of borrowed funds

Question 11

Mort. insurance premiums is a

Answer 11

one time payment or can be added to the principal amount

Question 12

Mort. insurance premiums is based on

Answer 12

loan to value ratio

Question 13

The higher the

% of the property value is borrowed

Answer 13

the high the % of insurance premium is charged

Question 14

mortgage amount

Answer 14

purchase price minus down payment

Question 15

Mort. insurance premium calculation

Answer 15

mortgage amount x premium %

Question 16

mortgage brokers assist a buyer in

Answer 16

obtaining financing

Question 17

Who is the client of the appraiser

Answer 17

usually the lender NOT the borrower

Question 18

Second step of the mortgage process is

Answer 18

appraisal and credit check

Question 19

last step of the mortgage process is

Answer 19

commitment

Question 20

Pre-qualifying for a mortgage

Answer 20

can be used as an estimate for how much a buyer can spend

Question 21

Before a buyer signs a notice of fulfillment the SP should confirm

Answer 21

that the buyer has received a mortgage commitment

Question 22

Gross debt service ratio represents

Answer 22

max % of a borrowers gross income to be allocated to mort. payments & property tax

Question 23

PIT

Answer 23

principal, interest, property tax paymetns

Question 24

PITH

Answer 24

heating costs

Question 25

Gross debt service ratio is calculated by

Answer 25

total monthly expense/total monthly income

Question 26

GDS for a purchase excluding heating costs is

Answer 26

(annual mort. payment + annual prop. tax)/gross annual income

Question 27

GDS for a condo calculation

Answer 27

(annual mort. payment + annual prop. tax + 50% of annual maintenance fee)/gross annual income

Question 28

Total debt service ratio

Answer 28

everything in the gds ratio + other debt obligations

Question 29

who pays for a home inspector

Answer 29

seller (pre-listing), buyer (AOP&S)

Question 30

Who pays land transfer tax

Answer 30

buyer