Your Client and the Marketplace Practice Quiz

Question 1

What is a mortgage?

Answer 1

An exchange of something of value like a property for a loan

Question 2

A mortgagee is

Answer 2

A mortgage lender

Question 3

Why is it important for real estate professionals to understand mortgage financing?

Answer 3

The real estate professional should know when to recommend their client speak with a mortgage professional

Question 4

What are three fiduciary responsibilities of a mortgage broker?

Answer 4

Treat both client and lender with equal care and honesty

Evaluate and list all available options for the borrower

Complete and submit any required documentation to the lender

Question 5

The three mortgage insurers in Canada are

Answer 5

CMHC

Sagen

Canada Guaranty

Question 6

What is a restrictive covenant

Answer 6

The promise not to do something

Question 7

What is an amortized mortgage

Answer 7

Amortized loans are gradually paid off through the use of blended payments, where with successive payment there is a steadily declining interest portion along with an increasing principal portion.

Question 8

Three facts about high-ratio insurance:

Answer 8

While the insurance protects the lender, the borrower typically pays the premium

Collected as a one time payment which is amortized over the course of the mortgage

Protects the lender from the borrower’s default on the loan

Question 9

What is a portable mortgage?

Answer 9

A portable mortgage privilege allows a property owner to transfer a current mortgage to a new property for the duration of its term and without penalty

Question 10

Best definition of “debt service ration”

Answer 10

To establish whether a borrower’s income is sufficient to repay the loan, lenders evaluate the borrower’s income by applying formulas referred to as gross debt service ratio (GDSR) and total debt service ratio (TDSR)

Question 11

What are the 5 C’s of credit for financial qualifying purposes

Answer 11

Character

Capital

Capacity

Collateral

Credit

Question 12

Three criteria of a uninsurable mortgage

Answer 12

Value over $1,000,000

Investment property

Amortization of 30 years or more

Question 13

What is Loan-To-Value (LTV)

Answer 13

Is the loan amount compared to the value or purchase price of the property, expressed as a percentage

Question 14

Four different types of value in real estate?

Answer 14

Objective Value

Subjective Value

Market Value

Investment Value

Question 15

True or False: The mortgage amount listed on a land title is current and can be used to understand the net equity a seller has in their home

Answer 15

False

Question 16

What is a reverse mortgage

Answer 16

Provides the borrower with access to capital without making standard principal and interest payments